it II ijjj lljj ll 

111 I I Hi . 



- 



THEIR ORGANIZATION, GRC 

AND MANAGEMENT 

By CLAY HER.RICK 







i 3 






TRUST COMPANIES 

Their Organization, Growth 
and Management 



BY 



CLAY HERRICK 



Second Edition Revised, and Enlarged 



BANKERS 
PUBLISHING 
COMPANY 



fm "»"-7 i 



NEW YORK 

BANKERS PUBLISHING COMPANY 

1915 






vA 



Copyright 1909 

BANKERS PUBLISHING COMPANY 

NEW YORK 

Copyright 1915 

BANKERS PUBLISHING COMPANY 

NEW YORK 




JUL 29 1915 
©GI.A401911 



PREFACE. 



THE writer is spared the task, somewhat common to authors, of of- 
fering an apology for the addition of another "to the already large 
number of books on the subject," because, the literature on the 
subject of trust companies is small in amount, and nearly all of it has 
appeared since the preparation of this work was begun. 

The present volume is composed of a series of articles which appeared 
in "The Bankers Magazine" of New York during the years 1904 to 1907, 
inclusive. When the preparation of the series was begun, in 1903, there 
had been published but one treatise on trust companies — Mr. George 
Cator's monograph on "Trust Companies in the United States," a valu- 
able work, but one which treats the subject briefly and from the academic 
standpoint. The only other writings on the subject consisted of adver- 
tising booklets published by trust companies, and a very few magazine 
articles. In 1904, Mr. Ernest Heaton issued his "The Trust Company 
Idea and Its Development," a brief but instructive sketch of the develop- 
ment of the institution in the United States, Canada, Australia and else- 
where. The following year there appeared Messrs. Kirkbride and Ster- 
rett's excellent work on "The Modern Trust Company," treating the sub- 
ject at length and from the practical standpoint. So far as the writer 
knows, these comprise all the general works that have been published on 
the subject. A number of the financial periodicals publish articles re- 
lating to trust companies from time to time, and many trust companies 
issue advertising booklets containing important information regarding 
their methods of business. But the material at the disposal of one who 
would make a study of the trust company from either the historical, 
academic or practical standpoint is thus far quite limited. The present 
volume contains the only attempt yet made, so far as the writer knows, 
to present an historical sketch of the development of the American 
Trust Company. 

The writer is conscious of some defects in the work, and no doubt 
there are other defects of which he is not conscious. The fact already 
mentioned, that the chapters of the book were originally written as a 
series of articles appearing monthly in a magazine, may account for some 
peculiarities of method. The time at the writer's disposal being such as 
could be found when not employed at his regular duties, was not suffi- 
cient to enable him to finish various parts of the work to Ins own satis- 
faction. He has, however, taken the greatest pains to insure accuracy in 
all statements made, and has verified much of the contents of the book 
by personal interviews and by correspondence with numerous trust com- 
pany officials and employees. Recognizing the fact noted in the text of 
the book that there is considerable diversity in methods and practices 
among different trust companies, he has endeavored to make the work 

iii 



iv PREFACE. 

fairly representative of the most common usages, giving in the chapters 
on forms and records, samples of those used by a number of different 
companies. This plan made impossible the following out of one com- 
plete system of forms and records such as a single company uses, a de- 
fect which is, in the writer's opinion, more than overcome by the advan- 
tage to the reader of having before him illustrations of the methods of 
a large number of jjrogressive companies. In the endeavor to make the 
work useful to the greatest number of trust companies, the writer has 
aimed to have it representative of the forms and methods of the com- 
pany of average size. 

While the writer is alone responsible for all views and statements pre- 
sented, he is under obligation to various gentlemen for information cour- 
teously given. In particular he wishes to acknowledge his indebtedness 
to the officials of the various companies whose forms are used to illustrate 
the book, for the use of the forms and for information given in response 
to letters; to state officials for information regarding state legislation; to 
W. E. Crittenden for the preparation of the chapter on Title Insurance; 
to the Old Colony Trust Company of Boston for permission to reprint its 
Rules for Stock Transfers; to E. A. Feasel, Librarian of the Cleveland 
Law Library, for access to the library in the preparation of the chapters 
on trust company laws; to E. E. Newman for suggestions regarding the 
detail work of the Corporations division of the Trust Department; to 
James Borrowman for information regarding the Australian trust com- 
panies ; to Frederick Vierling for information regarding the Real Estate 
Department and for permission to print his rules governing stock issues 
and papers required in accepting bond trusts ; to the Franklin Trust 
Company for permission to print its By-laws. Acknowledgment is made 
in foot-notes throughout the book for information due to various author- 
ities quoted. 

In preparing the articles for publication in book form, the statistical 
matter in the chapter on the history of the trust company movement, and 
the summary of the state laws (originally published in 1904), and other 
matter, have been brought down to the year 1908, inclusive. 

CLAY HERRICK. 
Cleveland, O., June, 1909- 

In preparation for the second edition of this book, the statistical 
matter in Chapter I., the discussion of legislation in Chapter IV., and 
the summaries of State laws in Chapter XVII. , have been brought up 
to December, 1914, and some revision of other chapters has been made. 
The writer wishes to express his appreciation of the cordial reception 
which has been given to the book. CLAY HERRICK. 

Cleveland, O., June, 1915. 



TABLE OF CONTENTS. 



CHAPTER I. 
HISTORY OF THE TRUST COMPANY MOVEMENT IN THE 
UNITED STATES, pp. 1-32. 

Diversity of Functions, 1 — First Grants of Trust Powers, 2 — Present 
Condition of the Four Earliest Companies, 6 — -Other Early Companies, 
7 — Relative Progress of Trust Companies and Savings Banks, 9 — 
Organization of Companies After the Civil War, 10 — Freedman's Sav- 
ings and Trust Co., 12 — Comptroller Knox's Criticism of Companies, 
13 — Competition Between Banks and Trust Companies, 14 — Steady 
Development, 15 — Growth from 1875, 16 — Chart Showing Growth, 18 
— Growth of Trust Companies and Other Banks Compared, 19 — Sta- 
tistics of Suspensions, 22 — Statistics 1875-1913, 26 — Reserves, 26 — 
Present Statistics, 28 — Recapitulation, 30 — Causes of Growth, 31. 

CHAPTER II. 
THE FUNCTIONS OF TRUST COMPANIES, pp. 33-53. 

Definition of "Trust Company," 33 — Nature and Variety of Individual 
Trusts, 34 — Probate Business, 37 — Investment Business, 38 — Real 
Estate Business, 40 — Insolvency Business, 40. — Trustee or Agent for 
Corporations, 41- — Transfer Agent and Registrar, 42 — Corporation 
Reorganization, 43— Fidelity and Title Insurance, 44 — Safe Deposit 
Business, 45 — Superiority of Trust Companies in Trust Capacities, 
45 — Banks and Trust Companies Compared, 47 — Miscellaneous Func- 
tions, 51 — Sources of Earning Power, 52 — Still in Formative Pe- 
riod, 53. 

CHAPTER III. 

THE ORGANIZATION OF TRUST COMPANIES, pp. 54-73. 

Elements Contributing to Success, 54 — Preliminary Steps, 55 — Incor- 
poration in New York, 55 — By-laws, 59 — Selection of Directors, 67 — 
Special Charters, 68. 

CHAPTER IV. 

TRUST COMPANY LEGISLATION, pp. 74 88. 

Progress of Legislation, 74 — Directors, 74 — Capital Stock, 75 — Pow- 
ers, 76 — Powers in New York, 77 — Trustee Powers, 78 — Holdings of 
Real Estate, 79 — Auxiliary Powers, 80 — Banking Powers, 80 — Reg- 
ulation, 82 — Double Liability, 85 — Deposit with State, 85 — Restric- 
tions on Loans, 84 — Reserves, 85 — Reports and Examinations, 87. 

CHAPTER V. 
ORGANIZATION OF THE WORKING FORCE, pp. 89-99. 

Diversity in Organizations, 89 — Duties of the Various Officers, 89 — 
Managing Officer, 90 — Loan Department, 91 — Banking Department, 
92 — Trust Department, 94 — Safe Deposit Department, 96 — Bond 



vi TABLE OF CONTENTS. 

Department, 96 — Foreign Exehange Department, 96 — Real Estate, 
Legal, Statistical Departments, 97 — Credit, Audit Departments, 98 — 
General Employees, 98. 

CHAPTER VI. 

FORMS AND RECORDS FOR THE TRUST DEPARTMENT, pp. 
100-161. 

Accounting System, 100 — Loose-leaf Books and Cards, 101 — delation 
of Trust and General Books, 102 — Trust Register, 103 — Journals and 
Ledgers, 110 — Corporations Division of Department, 113 — Estates 
Division of Department, 1 1 8 — Sundry Forms Corporations Division, 
127 — Forms for Transfer of Stock. 131 — Forms for Bond Trusts, 137 
— Coupons, 143 — Sundry Forms Estates Division, 148 — Record of 
Securities, 148 — Real Estate Record, 152 — Insurance Record, 153 — 
Rents, 154 — Tax-book, 155 — Vouchers, 157 — Statements of Account, 
159. 

CHAPTER VII. 

FORMS AND RECORDS FOR THE SAFE DEPOSIT DEPART- 
MENT, pp. 162-176. 
Identifying Customers, 162 — Appointment of Deputies, 164 — Joint 
Tenants, 165 — Renting to Corporations, 166 — Cash Records, 168 — 
Ledgers, 168 — Visitors' Register, 171 — The Storage Department, 172 
—Rules, 174. 

CHAPTER VIII. 

FORMS AND RECORDS FOR THE BANKING DEPARTMENT, 
pp. 177-267. 
Progress, 177 — Labor Saving, 177 — Forms for Lfse of Customers, 178 
— Pass-books, 180 — Voucher Checks, 183 — Tellers' Records, 188 — 
Proofs, 188 — The Individual Books, 193 — Boston Ledger, 195 — Short 
Cuts, 201 — Interest on Balances, 204 — Statements of Account, 208 — 
Stop-Payments, 210 — The General Books, 211 — Boston Ledger for 
General Accounts, 217 — The Loan Department, 220 — Loan Ledgers, 
225 — Collateral Loans, 226 — Mortgage Loans, 231 — Miscellaneous 
Loan Forms, 240 — Bills Discounted, 245 — Investment Records, 249 — 
Clearing Checks, 252 — Collections, 253 — Letters of Remittance, 254 — 
Official Checks, 255 — Drafts on Banks, 258 — Certificates of Deposit, 
258 — Certified Checks, 260 — Record of Expenses, 262 — Records of 
Supply Department, 265. 

CHAPTER IX. 

FORMS AND RECORDS FOR THE SAVINGS DEPARTMENT, pp. 

268-283. 
Opening an Account, 268 — Signature Cards and Identification, 268 — 
Joint Accounts, 270 — Society and Corporation Accounts, 271 — Chang- 
ing Accounts, 271 — Pass-books, 272 — Deposit Slips, 273 — Withdraw- 



TABLE OF CONTENTS. vii 

als and Checks, 273 — Notices of Withdrawal, 275 — Journals, 276 — 
Proof of Postings, 277 — Ledgers. 278 — Card Ledgers, 280 — Daily 
Trial Balance, 281— Lost Pass-books, 283. 

CHAPTER X 

FORMS AND RECORDS FOR THE REAL ESTATE DEPART- 
MENT, pp. 284-296. 
Work of the Department, 284 — Equipment, 285 — Listing and Index- 
ing Properties, Owners and Tenants, 286 — Report and Memorandum 
of Sale, 290 — Renting Property, 291 — Receipts for Rent, 292 — 
Statement of Rents, 294 — Tickler, 294 — Methods of Accounting, 294 
Rent Books, 296. 

CHAPTER XI. i 

THE TITLE INSURANCE DEPARTMENT, pp. 297-306. 

Character of the Business, 297 — Equipment, 297 — Application for 
Title Insurance, 298 — Form of the Policy, 299 — Conditions of the 
Policy, 301- — -Insuring the Grantee, 303 — Extension of Policy, 304 — 
Release of Claim, 305 — Policy Register, 306 — Value of Title Insur- 
ance, 306. 

CHAPTER XII. 

METHODS OF INCREASING BUSINESS, pp. 307-322. 

Reasons Why a Trust Company Should Advertise, 307 — Kinds of Ad- 
vertising, 308 — Management, 308 — Planning a Campaign, 310 — Me- 
diums, 312 — Newspapers, 312 — Circulars and Booklets, 312 — Letters, 
314 — Other Mediums, 315 — Personal Efforts, 316 — Audits and Ex- 
aminations, 317 — Treatment of Customers, 317 — Increasing Trust 
Business, 318 — Preparation of Advertising Copy, 320 — Typographi- 
cal Make-up, 322. 

CHAPTER XIII. 

EXAMINATIONS, AUDITS AND OTHER MEANS OF SAFE- 
GUARDING THE BUSINESS, pp. 323-332. 

The Parties Interested, 323 — Accounting and Administration, 323 — 
Purposes of Audits, 324 — Examinations by State Officials, Commit- 
tees of Directors, Stockholders, etc., 325 — The Audit Department, 
327 — Selection and Treatment of Employees, 328 — Qualifications of 
Employees, 330. 

CHAPTER XIV. 

SUNDRY TOPICS, pp. 333-345. 

Fees, Problem of Determining, 333 — Fees as Executor, etc., 334 — As 
Assignee and Receiver, 335 — As Trustee Under Bond Issue, 335 — As 
Transfer Agent, 336 — Time and Labor-Saving Devices, 336 — Branch 
Banking, 337 — Banking by Mail, 337 — Offices and Buildings, 338 — 
Exclusive Buildings, 339 — Membership in Federal Reserve Banks, 340. 



viii TABLE OF CONTENTS. 

CHAPTER XV. 

THE DUTIES AND LIABILITIES OF TRUST COMPANIES 
ACTING IN VARIOUS CAPACITIES, pp. 346-376. 
Transfer Agent, Duties of, 346 — Liabilities, 348 — Liabilities of a 
Corporation Acting as Its Own Transfer Agent, 349 — Responsibility 
of Separate Transfer Agent, 351 — Methods of Safeguarding the 
Transfer Agent, 354 — Rules for Stock Transfers, 355 — Duties and 
Liabilities of the Registrar, 358 — Trustee Under Bond Issues, 361 — 
Conditions in Trust Deed, 362 — Papers Required in Assuming Trust, 
366 — The Payment of Coupons, 369 — Escrows, 370 — Depositary 
Under Plans of Reorganization, 370 — Executor or Administrator, 371 
— Trustee, 373 — Guardian, Conservator, etc., 374 — The Investment of 
Trust Funds, 375. 

CHAPTER XVI. 

TRUST COMPANIES OUTSIDE OF THE UNITED STATES, pp. 
377-389. 

Germs of the Idea in India and South Africa, 377 — The Australian 
Trustee Company, 377— Statistics of Australian Companies, 379 — 
Powers, 380 — The New Zealand Public Trust Office, 382 — Canadian 
Trust Companies, 384 — Cuba, Mexico, 386 — Argentine Republic, 387 
Japan, 387— England and Scotland, 388- — European Countries, 389. 

CHAPTER XVII. 

SUMMARY OF STATE LAWS RELATING TO TRUST COM- 
PANIES, pp. 390-475. 

Alabama, 390 — Arizona, 391 — Arkansas, 391 — California, 393 — Colo- 
rado, 396 — Connecticut, 397 — Delaware, 399 — District of Columbia, 
400 — Florida, 401 — Georgia, 403 — Hawaii, 404 — Idaho, 405 — Illinois, 
406 — Indiana, 408 — Iowa, 409 — Kansas, 411 — Kentucky, 412 — 
Louisiana, 414 — Maine, 416 — Maryland, 418 — Massachusetts, 420 — 
Michigan, 423 — Minnesota, 425 — Mississippi, 426 — Missouri, 428 — 
Montana, 430 — Nebraska, 431 — Nevada, 433 — New Hampshire, 434 
— New Jersey, 436— New Mexico, 439 — New York, 441 — North 
Carolina, 445 — North Dakota, 446 — Ohio, 448 — Oklahoma, 450 — 
Oregon, 452 — Pennsylvania, 454 — Rhode Island, 457 — South Caro- 
lina, 459 — South Dakota, 459 — Tennessee, 460 — Texas, 462 — Utah, 
465 — Vermont, 466 — Virginia, 468 — Washington, 469 — West Vir- 
ginia, 470 — Wisconsin, 472 — Wyoming, 474. 

BIBLIOGRAPHY, pp. 476-485. 

Books and Pamphlets Relating Directly to Trust Companies, 476 — 
Proceedings, Reports and Periodicals, 477 — Articles in Periodicals, 
479 — Banking, Technical and General, 482. 

GENERAL INDEX, p. 486. 

INDEX TO FORMS, p. 495. 



TRUST COMPANIES. 



CHAPTER I. 

HISTORY OF THE TRUST COMPANY MOVEMENT IN THE 

UNITED STATES. 

THE term "trust company" has not in the past been one whose 
meaning was clearly defined; nor is it at the present day so used 
as to admit of a definition that is both brief and accurate. This 
doubtless results, in part, from the fact that the trust company is an 
institution whose characteristics have gradually developed in accordance 
with the needs of the time and of the community; and in part because 
concerns doing widely different kinds of business have found it of ad- 
vantage to adopt the name "trust company/'' and to incorporate under 
the laws governing such companies. Even salary-loan concerns and 
pawnbrokers have made use of the name, and numerous abuses have led 
several of the States to pass laws prohibiting the use of the word "trust" 
in titles, except by direct authority. 1 

Diversity of Trust Company Functions. 

An analysis of the business actually transacted by the two thousand 
trust companies now (1914) existing in the United States shows that 
the term "Trust Company" is applied to corporations whose functions 
vary greatly. Some are simply banks of deposit and discount; many are 
savings banks ; some are safe-deposit companies ; some are title-insurance 
or fidelity-insurance companies; some serve chiefly as fiscal agents for 
corporations, and as registrars, transfer agents, intermediaries in reor- 
ganizations, promoters, etc. ; some devote themselves to the care of estates 
and to services as executors, administrators, guardians, trustees, etc. 
Most companies combine two or more of these classes of functions, while 
a few undertake nearly all of them. In early years the life insurance 
and trust businesses were intimately associated. 

Thus it is evident that in tracing the development of trust companies 
we shall find ourselves treating of institutions which, under the same 
general name, have performed functions of various kinds. Until recent 
years statistics regarding trust companies have been difficult to obtain, 
and none are available which distinguish between the different classes 
of companies using that name. There is no available information show- 
ing how many of the trust companies are doing a trust business properly 
so-called, as distinguished from ordinary savings or commercial banking. 
It is also to be observed that some of the functions which are coming to 
be recognized as distinctively those of the trust company have always 
been carried on to some extent bv banks. 



1 This was done in New York in 1900. 



2 TRUST COMPANIES. 

What has been said refers to the use of the term by those who are to 
some degree, at least, conversant, with its true or usual meaning. The 
general public is still curiously ignorant of the signification of the name; 
and, incredible as it may seem, many intelligent people even confuse the 
trust company with the "trust." 

A ludicrous instance of this was reported at the meeting of the Ameri- 
can Bankers' Association in 18.97- "In response to a request addressed 
to the Secretary of State for each State, for a certified copy of the laws 
relating to trust companies, about half a dozen secretaries transmitted 
copies of the laws regulating, restricting or prohibiting pools, trusts, 
unlawful combinations and conspiracies in restraint of trade. The copies 
of these laws were returned with an explanation that it was the statutes 
relating to trust companies which act as trustee, executor, etc., which 
were desired. In one case, the Attorney-General, to whom the letter was 
referred, replied that he regretted misreading the first letter on the sub- 
ject, but after a thorough search he was convinced that there were no 
statutes of his State relating to trust companies, and that, as far as he 
could learn, there were no trust companies doing business in his State, 
except the Standard Oil Co." 2 

Education on the subject has evidently been going on, for the writer 
has had no trouble in getting satisfactory replies from officials of all 
the States. 

In the following pages the writer has aimed to keep in mind, when- 
ever possible, the distinction between the trust company proper and the 
ordinary bank doing business under the name "trust company;" but the 
reader is reminded that, in the statistics particularly, it is not possible to 
follow out the distinction. The reader will also observe that in our day 
the trust company has, in most States, so far entered into the field of 
the ordinary bank, that a proper definition would assign to it both bank- 
ing and trust functions. 

Both the name trust company and the idea of its typical functions 
have been known since early in the nineteenth century. It was not sup- 
posed, however, that these functions were of sufficient importance to 
establish a distinct class of companies for their performance, nor did the 
trust company as an institution attract general attention until well along 
in the last quarter of the century. 

The First Grant of Trust Company Powers. 

The earliest instance of a company chartered with power to perform 
trust business was that of the Farmers' Fire Insurance and Loan Com- 
pany, which was incorporated by the Legislature of New York, Feb- 
ruary 28, 1822. 3 The act states that certain persons "Associated as a 



2 Paper by Ralph Stone on "Statutes of the Several States Relating to Trust 
Companies." Proceedings American Bankers' Association, 1897, p. 158. 

3 For the facts stated regarding the early history of this company, see Cator; 
"Trust Companies in the United States," pp. 67-72; and Proc. Amer. Bankers' 



HISTORY OF TRUST COMPANY MOVEMENT. 3 

company under the name of the Farmers' Fire Insurance and Loan Com- 
pany, as well for the purpose of accommodating the citizens of the State 
residing in the country with loans on the security of their property 
(which cannot now be obtained without great difficulty) as to insure 
their buildings and effects, and those of other persons, by loss from fire, 
and also for such other useful purposes as are hereafter specified, have 
prayed the Legislature for a charter of incorporation, to be located in 
the City of New York, which it is reasonable to grant." The company 
had an authorized capital of $1,500,000, but was permitted to begin with 
$500,000. It was empowered to loan upon farms, houses, factories or 
real estate; but mortgaged property taken on foreclosure could not be 
held longer than five years, on penalty of being forfeited to the people 
of the State. The company was authorized to grant annuities; to insure 
all kinds of property against loss or damage by fire; to purchase and 
hold any stock or foreign debt, or the stock of any corporation. It was 
especially provided that nothing in the act should be so construed as to 
authorize the said corporation to receive any deposit or deposits, or to 
discount any promissory note, bond, due-bill, draft or bill of exchange, 
''nor shall it be so construed as to allow any banking privileges or busi- 
ness whatever." 

Two months later — April 17, 1822 — the same Legislature passed 
another act providing "That the said corporation shall also have au- 
thority to receive and take by deed or devise any effects and property, 
both real and personal, which may be left or conveyed to them in trust; 
and to assume, perform and execute any trust which has been or which 
may be created or declared by any deed or devise as aforesaid; and the 
said corporation are authorized to receive, take, possess, and stand seized 
of, and to execute any and all such trust or trusts in their corporate 
capacity and name, in the same manner and to the same extent as trustee 
or trustees might or could lawfully do. and no further." 

There appears no reason to question the statement of the company 
that this was the earliest bestowal of such powers upon any corporation 
in the United States. It will be noticed that the powers granted are quite 
as broad as those now usually given to cover trustee work, though the 
language is more concise and less explicit than that contained in most 
modern charters. That the growth of this part of the company's busi- 
ness was rapid is shown by the fact that the insurance business, 
which was locked upon at first as its chief field of operations, soon began 
to be neglected in favor of the trust business. This line of work, once 
established, grew steadily, and it was finally found advisable to give up 
the insurance business altogether. In 1 836 the name was changed to 
the Farmers' Loan and Trust Company. 

Eight years later — in 1830 — another company was established in 



Assn., 1899, pp. 252-3, paper by Francis S. Bangs. That the company performed 
trust functions almost from the beginning is also attested by a letter from the 
Secretary of the company. 



4 TRUST COMPANIES. 

New York citv with practically the same powers. This was the New 
York Life Insurance and Trust Company, whose capital was one million 
dollars, and which was empowered to write insurance on lives, and to 
execute trusts of every description. For many years after its incorpora- 
tion life insurance was the most important branch of its business, and in 
1903 it still made a feature of annuities. This company "has never had 
accounts such as arc carried by commercial or savings banks, its de- 
posits in trust being largely moneys of executors, trustees, associations, 
etc." 4 It declines all corporation business, and administers only private 
trusts. 

It was not long before the trust business took root and vigorously 
developed in New York's old rival, Philadelphia. Strangely enough, 
however, the suggestion of taking up the new line of business came not 
from New York, but from the far East. This fact would seem to estab- 
lish that, however successful the experiment may have seemed to the 
Farmers' Fire Insurance and Loan Company, it attracted comparatively 
little attention among other concerns in New York, and almost none 
ninety miles away, in Philadelphia. 

Gathered in the Merchants' Coffee House in Philadelphia — which 
took the place of the business men's club of our day — as early as Decem- 
ber, 1809, a group of prominent philanthropists and financiers of the 
Quaker City had determined upon the incorporation of a company for 
the insurance of lives and the granting of annuities. Three years later, 
on March 10, 1812, the Governor approved the charter, which had been 
granted by the Legislature only after much opposition, and later in the 
same month the company began business with an authorized capital of 
$500,000. It prospered sufficiently to declare its first dividend of four 
per cent, on the capital paid in, on July 3, 1815. Its business during 
these early years, and up to 1836, was correctly described by the title of 
the company — a title which it still retains — the Pennsylvania Company 
for Insurance on Lives and Granting Annuities. In 1829 the attention 
of the officers of the company was attracted to a new line of business. 
"The great success of what in India at this time were called agency houses 
was irresistibly drawing the attention of financiers toward them. These 
were concerns organized to transact business for trustees or individuals, 
to receive moneys on deposit and to administer estates, and the advance- 
ment of the Pennsylvania Company in its chosen work induced its officers 
to desire an expansion in this new direction." 5 On February 4, 1830, the 
directors appointed a committee to report on the advisability of entering 
on "the receipt of money from persons, and, in consideration thereof, 
carrying out or executing such trusts as the persons giving the money 
should designate." The committee reported in favor of the project, the 
attorneys to whom was referred the legality of the undertaking gave their 



4 Letter from the President of the company. 

5 "Sketch of the Pennsylvania Co. for Insurance on Lives and Granting An- 
nuities," p. 32. 



HISTORY OF TRUST COMPANY MOVEMENT. 5 

approval, and in January, 1831, the officers were empowered to go ahead 
with the performance of the new line of work. But for some unexplained 
reason the work was not taken up, and the efforts of those who wished 
to push the matter were not successful until February 25, 1836, when 
the Legislature granted and the Governor approved a supplement to the 
charter, authorizing the company to enter into the business of executing 
trusts. 

The powers granted were: To accept and execute trusts of every 
description; to be appointed trustee, assignee, guardian, committee or 
receiver; to receive moneys or other property, real or personal, in trust 
or on deposit, to accumulate the interest thereon, or to allow and pay the 
same. 

As trustee, assignee, etc., the company was not required to give bond, 
the company's capital and assets being taken as the security required by 
law. The charter contained a provision that any court which appointed 
the company to any trust position might appoint a suitable person to 
investigate the affairs and management of the company: said person to 
report "The manner in which its investments are made, his opinion of 
the ability and integrity with which the affairs of the company are con- 
ducted; of the prudence and safety of its investments and the security 
afforded to those by whom its engagements are held; the expense of every 
investigation so made shall be defrayed by the said company." The pro- 
vision was also made that the company should pay a reasonable rate of 
interest upon any sums not less than one hundred dollars collected in its 
capacity as trustee, assignee, guardian, committee or receiver, and that it 
should accumulate the surplus income of any minor's estate by adding 
interest annually on the whole as a new principal. The power to act as 
executor and administrator was not given until seventeen years later - -in 
1353. 

Upon the new field of business thus opened to it, the company en- 
tered with vigor, the six years of delay in obtaining the necessary author- 
ilv seeming to have prepared the way for a rapid accumulation of trust 
business. "In the course of a few years the trust transactions became 
one of the most profitable as well as most important features of the in- 
stitution, and this feature forms to-day its chief business. The rise of 
the trust department followed the gradual decline of the life-insurance 
branch. The practical relinquishment of this business became an advisa- 
ble policy of the company when the field was occupied by the numerous 
organizations which, in order to meet rising and acute competition, 
adopted methods that could not commend themselves to a corporation 
having charge of so large a number of trust estates." 

During the next month of the same year (March 17, 1836), a charter 
granting the same trust powers was given to the Girard Life Insurance, 
Annuity and Trust Company. This company also began at once the 



6 "Sketch of the Pennsylvania Co. for Insurance on Lives and Granting An- 
nuities." pp. 37-38. 



6 TRUST COMPANIES. 

accumulation of trust business, which increased at a satisfactory rate; 7 
although it seems not to have made this business its main feature at first, 
as did the Pennsylvania Company from this time on. 

The year 1836, then, saw in active pursuance of the trust business in 
the United States four companies, two in New York city and two in 
Philadelphia. During the years that immediately followed and down to 
the present time, their business in the trust department, as well as in other 
lines, has steadily grown, and they are among the leading companies of 
to-day. The Pennsylvania Company had, in 1863, accumulated a surplus 
of profits equal to its original capital of $500,000, and thereupon in- 
creased its capital to $1,000,000, distributing a stock dividend of 100 per 
cent, to its shareholders. In 1869 its business was divided into depart- 
ments — the trust department, the department of insurance on lives and 
granting annuities, and the banking department. But no life insurance 
policies have been written since 1872, nor any annuities or endowments 
nnce 1873. The safe-deposit department was added in 1872, in which 
year also the capital was increased to $2,000,000. 8 In 1895 the com- 
pany controlled one hundred and thirty-six millions of securities held in 
trust, taken at their par value, and received during the year more than 
a million dollars for rentals. 9 On June 1, 1914, it reported a capital 
stock of $2,000,000, surplus and profits $4,860,410, deposits $30,499,- 
461. The par value of the investments held for individual trusts was 
$197,623,865, besides which this department held $4,050,539, in cash 
uninvested. In the corporate trust department, the amount of bonds of 
corporations secured by mortgages or other collateral was $238,164,030, 
and the amount of securities held as collateral under corporate deeds of 
trust was $93,857,978. 

The Girard Company, which on June 22, 1899, changed its name to 
The Girard Trust Company, reported on June 1, 1914, capital 2,500,- 
000, surplus and profits $9,718,450, deposits $39,633,683. It held trust 
funds, invested and uninvested, amounting to $168,311,108. The 
amount of bonds secured by mortgages issued to the company as trustee 
was $1,055,710,167, and the amount of securities deposited with it to 
secure issues of collateral trust bonds was $302,059,910. 

The Farmers' Loan and Trust Company, of New York, had on Jan- 
uary 1, 1880, accumulated deposits of over $6,000,000. This increased 
to $24,000,000 in 1890, and to $41,500,000 in 1900. The company's 
statement for June 30, 1914, shows capital $1,000,000, surplus and 
profits $6,259,256, deposits $121,212,197, total resources $130,540,434. 

The New York Life Insurance and Trust Company had on June 
30, 1914, total resources of $40,923,600; the capital being $1,000,000, 
surplus and profits $3,827,800, deposits $32,758,900. 

Of all the trust companies now in existence, these four were the only 
ones which began business prior to the year 1853. There were, however, 



7 Letter from the trust officer of the company. 

8 Sketch of the Pennsylvania Company, pp. 45, 49, 51, 52, 136, 144. 

9 Cator, p. 75. 



HISTORY OF TRUST COMPANY MOVEMENT. 7 

a few other companies incorporated in these early years which have long 
since gone out of business, and which bore the name of trust companies. 

The Ohio Life Insurance and Trust Company, of Cincinnati, was 
incorporated February 24, 1834, and began business in January of the 
following year. 10 It had a trust department and a banking department. 
Its powers included the issuance of circulating notes, and the leading 
object of its incorporation seems to have been the supplying of capital 
for the business of the community. For many years the company did 
a large business, though, on account of losses, its dividends were not so 
great as had been hoped. For the first seventeen years they averaged 
not quite six and one-quarter per cent, per annum. Early in 1852 the 
trust department had assets of $2,750,000. In addition the banking 
department had assets of over $1,345,000. The last years of this com- 
pany were filled with troubles over the State tax question, the company 
being called upon for taxes of about $100,000 per year. The failure, 
which occurred August 24, 1857, and which precipitated the panic of 
that year, was attributed by the President of the company to "loans to 
parties unable to respond at this time." 11 

In 1835 The Southern Life Insurance and Trust Company was in- 
corporated by the Territory of Florida (Laws of Florida 1835, p. 265). 
Its existence was terminated in 1845 when Florida became a State, the 
Legislature having refused to recognize the charter granted by the 
Territory.* 

The passage of the Free Banking Law in New York, in 1838, was 
followed very soon (in July, 1838) by the incorporation of the North 
American Trust and Banking Company, of New York city. 12 Under 
the law, the company could discount bills and notes and other evidences 
of debt, and loan money on any kind of security, real or personal. The 
company had a brief but strenuous existence. Its capital "in cash, 
bonds and mortgages was between two and three millions of dollars, and 
upon this the directors and managers contracted debts and loans to the 
amount of $1 8,000,000. " 13 In January, 1839, the company purchased 
$1,200,000 bonds of the State of Indiana, giving its notes in payment. 
It also bought Ohio State stocks, giving negotiable time certificates of 
deposit. For many years after the failure of the company the courts 
were occupied with litigation regarding the legality of these transactions, 
and the creditors included man}^ anxious investors on the other side of 
the Atlantic. Another concern that passed like a comet through the 
financial sky of these days was the Kentucky Trust Company, which 
failed in 1854, after a very brief career. It had been chartered with an 
unlimited capital. 



10 Bankers Magazine, July, 1852, Vol. VII, p. 74. 

11 Ibid., September, 1857, Vol. XII, p. 240. 
♦Letter from the Comptroller of the State. 

12 Ibid., November, 1854, Vol. IX, p. 349. 

13 Ibid., November, 1852, Vol. VII, p. 341. 



8 TRUST COMPANIES. 

The year 1853 was marked by the incorporation of the first company 
organized in this country to transact exclusively the business of a trust 
company. This was the United States Trust Company, of New York city, 
created by an act of the Legislature April 12, 1853. "Its charter was 
the basis of all special charters of a similar character afterward granted 
in New York, as well as of the general law for the incorporation of trust 
companies, which was adopted in 18S7 and which has terminated the 
granting of special charters for such purposes." 14 

This company has had an important place in financial history during 
its sixtyodd years of life, and its list of directors and officers has in- 
cluded men of national prominence. During the last two years of the 
Civil War, when the financial problems of the Government were most 
serious, John A. Stewart, then Secretary of the company, at the earnest 
request of President Lincoln, undertook the work of Assistant Treasurer 
of the United States in the city of New York. Mr. Stewart became 
President of the company in 1865, and served with conspicuous success 
until 1903. when he tendered his resignation. He was succeeded by ex- 
Secretary of the Treasury Lyman J. Gage. 

During its first half century of life, the company paid to those who 
entrusted to it their idle moneys for accumulation more than thirty 
millions of dollars in the way of interest on such funds. 15 Its state- 
ment on June 30, 1914, shows total resources of $81,828,858, capital 
$2,000,000, surplus and profits, $14,151,914, deposits $64,817,255. 

In 1857 the Merchants' Loan and Trust Company, of Chicago, the 
oldest existing bank in the State of Illinois, was granted a special charter 
by the Legislature of that State. Under this charter the company was 
authorized tc do a general trust as well as banking business; but it did 
no trust business until about 1880, and did not make a specialty of such 
business until recent years. Its trust department was organized in 
1901. 16 

There were some other companies with the word "trust" in their 
titles incorporated in Illinois at this time and a little later, but they were 
essentially State banks with a different name. Among these were the 
Chicago Loan and Trust Company, chartered in 1857, and the Real 
Estate Loan and Trust Company. Neither is now in existence. 17 

It is thus evident that down to the time of the Civil War the number 
of companies having the word "trust" in their titles was very small, and 
the number that actually undertook the trust business probably did not 
exceed half a dozen. That there were not more trust companies organized 
during this period seems at first thought somewhat remarkable in view 
of the success of the four companies first mentioned, and in view of the 



14 Fiftieth anniversary circular of the company, 1903, p. 8. 

15 Ibid., p. 7. 

16 Letter from the Secretary of the company. 

17 Cator, p. 19. 



HISTORY OF TRUST COMPANY MOVEMENT. 9 

fact that this period was prolific in the formation of State banks. Presi- 
dent Jackson's successful fight against the second Bank of the United 
States, followed by the removal of the public deposits to "pet banks/' 
and the downfall of the Government bank, opened the field for new 
financial institutions. That field was, however, almost wholly for con- 
cerns that issued circulating notes, and this function was evidently not a 
part of the business of insurance companies, which were at that time, as 
we have seen, the only corporations engaged in the trust business. As 
several recent writers have pointed out, the business of handling deposits, 
which is now so important to most trust companies, was then of slight 
consequence as compared with that of note issue. 

Relative Progress of Trust Companies and Savings Banks. 

Another point of interest in this connection is the relative progress 
of the savings bank and the trust company movements. Each had its 
origin in semi-philanthropic effort (as did also the insurance business), 
though doubtless the savings bank movement partook more especially of 
this characteristic. The two classes of institutions were established at 
about the same time, the first savings banks in the United States having 
begun business in 1816— one in Philadelphia and one in Boston. The 
growth of the savings banks, after the first few years of experiment, was 
rapid, and they became an object of public interest almost from the 
start. There were thirty-six savings banks in the country in 1830, with 
deposits of nearly $7,000,000; in 1835, fifty-two banks, with deposits 
of over $10,500,000; in 1850, 108 banks, with deposits of over $43,000,- 
000. In 1885 — about the time that the trust-company movement began 
in some earnest — there were 646 savings banks, with deposits of $1,095,- 
000,000. 18 Trust companies, on the other hand, were established half 
a century before they began to attract general attention, and where known 
at all in the early years the trust business was looked upon as only one 
of the less important functions of insurance companies. For this marked 
difference in the early history of the two classes of institutions, one 
explanation suggests itself which is quite sufficient to account for the 
difference. It is that the savings-bank movement began when the country 
had reached a condition wherein its need was felt, while the trust com- 
pany was established in advance of any recognized need. Indeed, as we 
shall see, the conditions which make possible that part of the trust com- 
pany's business which has to do with large enterprises of a corporate 
nature have not existed until within the last two or three decades. 

It will be interesting to get an idea of the way in which the trust 
business was regarded in New York about the middle of the last century. 
In The Bankers Magazine for November, 1854, 19 there appeared an 



18 Report of Comptroller of the Currency, 1902, p. 420. 

19 Bankers Magazine, Vol. IX, p. 321. 

2 



10 TRUST COMPANIES. 

article on "The Trust Companies of New York." These are given under 
three heads, viz. : 

1. The New York Life Insurance and Trust Company. 

2. The United States Trust Company, of New York. 

3. Life Insurance Companies. 

The Farmers' Loan and Trust Company is included with regular life 
insurance companies under the third head. Of the United States Trust 
Company, it is remarked that it does no life-insurance business — only 
"receiving moneys on deposit, and executing trusts." The figures are 
given for the two companies above named, among the items for the New 
York Life Insurance and Trust Company, being "deposits in trust, trust 
accumulation, life insurance, annuity granted, and receivership account." 
After a description of the two companies, the article proceeds: "There 
are other companies in the city which, if not strictly termed trust com- 
panies, are yet so in fact, as they are the depositories of funds that will 
not be demanded for a long series of years, and on the solvency and 
stability of whose affairs much depends. We allude to the life insur- 
ance companies." 

Organization of Trust Companies After the Civil War. 

The last year of the Civil War and the years immediately following 
saw a very distinct movement toward the formation of trust companies, 
and marked its spread into new territory. Of the companies now in 
existence over forty began business during the j^ears 1864-1 875. 20 How- 
ever, many of these companies were in their early years not trust com- 
panies, but ordinary banks. The States represented were Pennsylvania, 
New York, New Jersey, Maryland, all the New England States except 
Maine, Illinois, Iowa and Georgia. In the eight years following 1865 
about thirty-seven new charters were granted in Pennsylvania; very few 
of them, however, were used. L1 

The. Union Trust Company, of New York, was chartered in 1864 and 
began its work in 1865; as did also The Provident Life and Trust Com- 
pany of Philadelphia, both companies transacting a trust business from 
the beginning. 2 " The Trust and Deposit Company of Onondaga, at 
Syracuse, N. Y., began business in 1866, undertaking from the first such 
trust business as was committed to it. 23 The year 1867 saw the begin- 
ning of the Safe Deposit and Trust Company, at Pittsburg, Pa., and of 
the Rhode Island Hospital Trust Company, of Providence, R. I. One 
of the leading objects of the organization of the latter was to serve as a 



20 See dates of organization of the various companies, given in "Trust Com- 
panies of the United States," published by the U. S. Mortgage and Trust Co., of 
N. Y. 

21 Cator, p. 16. 

22 Letters from the trust officers of the companies. 

23 Letter from the Secretary of the company. 



HISTORY OF TRUST COMPANY MOVEMENT. 11 

pecuniary helper to the Rhode Island Hospital, then in its infancy. This 
company, which was modeled in part after the United States Trust Com- 
pany, of New York, was given a threefold character by its charter: 
"First, a bank, with all banking powers except that of issuing a cur- 
rency; second, a savings institution; third, an incorporated executor, ad- 
ministrator and trustee of the estates of decedents and of the living who 
might desire to avail of its services."- 4 

In 1868 were chartered the Brooklyn (N. Y.) Trust Company, which 
commenced a trust business at once ; the Worcester Safe Deposit and 
Trust Company, of Worcester, Mass., which, however, did not accept any 
trust until 1881; and the Hartford (Conn.) Trust Company, which did 
not enter into a trust business until 1899- 25 Among other companies 
chartered in New York during the sixties were the New York Guaranty 
and Indemnity Company, 1864; the National Trust Company, 1867, and 
the New York Mercantile and Trust Company, 1868. 26 All three have 
passed out of existence. The Northern Trust Company of Philadelphia 
was established in 1881, transacting trust business from the start. 27 

Boston now became interested in the movement, and in 1871 the New 
England Trust Company, which had been chartered in 1869, began busi- 
ness, receiving its first trust in May of that year. 28 The Massachusetts 
Trust Company, of Boston, chartered in 1870, also began business in 
1871, but did not engage actively in the trust business until 1887. 29 By 
1875, besides other companies in NeAV York, Pennsylvania, Connecticut 
and Massachusetts, there had begun business the Camden Safe Deposit 
and Trust Company, of Camden, N. J., which exercised at once its 
powers to act as executor, administrator, guardian, agent, etc. ; The 
Connecticut Trust and Safe Deposit Company, of Hartford, which at 
once undertook trust business; 29 and the Illinois Trust and Savings 
Bank, of Chicago, which, though authorized by its charter to accept and 
execute trusts, did not use such authority until I888. 30 

Meantime during the sixties there had come into being a class of in- 
stitutions whose business is now being taken up very generally by trust 
companies — namely, the safe-deposit companies. The Safe Deposit and 
Trust Company, of Baltimore, Md., was organized in 1864 as a safe- 
deposit company only, its trust business being taken on in 1876. S1 The 
Fidelity Trust Company, of Philadelphia, was established in 1866 as 
the Fidelity Insurance, Trust and Safe Deposit Company. While this 
company undertook the other lines of business indicated in its title, it 
made a specialty of the safe-deposit business, and claims to be the 



24 Circular issued by the company, giving its history. 

25 Letters from officers of the companies. 

26 Bankers Magazine, Vol. XXIX, p. 678. 

27 Letter from the Treasurer of the company. 

28 Letter from the trust officer of the company. 

29 Letter from the Secretary of the company. 

30 Letter from the Secretary of the company. 

31 Letter from the Vice-President of the company. 



12 TRUST COMPANIES. 

pioneer company in the country in this business. 32 The Boston Safe 
Deposit and Trust Company was organized in 1867 as a safe deposit 
company only; its name being changed and trust functions added in 
1874 and 1877. The Bankers Magazine for October, I866, 33 mentions 
the recent organization of the Safe Deposit Company, of New York, 
which by its charter was restricted to the safe-keeping of valuables. 
The renter of the safe exclusively held the key. Rents for the safes 
were $20, $30, $35, $40 and $45 per annum. The article says: "A 
similar company has been formed at Philadelphia and Cincinnati, and 
others are proposed in large cities." The same magazine in September, 
1871, stated that there were many such companies in New York, Bos- 
ton, Philadelphia, Hartford, Chicago "and other cities." The other 
cities must have included Baltimore and Cincinnati. It mentions the 
Chicago Fidelity Safe Depository, just established, with which was to 
be associated the Guarantee and Investment Association. The latter 
had a fiduciary and an executive department, and handled the "manage- 
ment of estates and executory trusts." 34 Hardly had the company been 
started when the great Chicago fire occurred. Its vaults were un- 
harmed, and there was "not a paper scorched, or wax melted." 35 In a 
list of five concerns doing this business in New York city are included 
the National Park Bank vaults, and the firm of Ball, Black & Co., 
jewelers. The arrangements of one of the Philadelphia companies are 
described, and they show that this business was conducted in most par- 
ticulars as it is now, but with more red tape. Accommodations were 
made for ladies, in some of these companies. Doubtless the organiza- 
tion of safe-deposit companies afforded great relief to the banks, which 
(as is the case still in some communities) did a great deal of safe-deposit 
work gratuitously. In 1873 The Bankers Magazine referred to the 
"habit of leaving bonds, etc., for safe-keeping in the vaults of banks," 
and added that "a bank is never paid" for such services. 36 This is not 
the only function of the modern trust company that the old-time bank 
used to perform without charge, and also without legal responsibility. 37 

Freedman's Savings and Trust Company. 

An account of the companies doing business during this period would 
be incomplete without reference to the Freedman's Savings and Trust 
Company, although this was a savings bank rather than a trust company. 



32 Letter from the Vice-President of the company. 

33 Bankers Magazine, Vol. XXI, p. 316. 

34 Ibid., Vol. XXVI, pp. 161 to 164. 

35 Ibid., Vol. XXVI, p. 632. 

36 Ibid., Vol. XXVII, p. 871. 

37 In 1876 a decision rendered by Justice Allen stated that National banks 
are not authorized to receive articles for safe-keeping, and cannot be held re- 
sponsible for same. Bankers Magazine, Vol. XXX. pp. 222-229. For an able dis- 
cussion of other trust company functions undertaken by national banks with- 
out legal authority, see Mr. Breckenridge Jones' paper on "The Trust Company — 
A Necessity," in Proceedings Trust Company Section. A. B. A., 1908. 



HISTORY OF TRUST COMPANY MOVEMENT. 13 

This institution was established through the efforts of Charles Sumner 
and others, in 1865, as a measure of philanthropy to aid the negroes in 
accumulating property for support in their newly-gained state of free- 
dom. For some years its business prospered greatly, and thirty branches 
were established in the Southern States. In 1870 its charter was amended 
so as to loosen the restrictions on its investments ; and this action, together 
with the panic of 1873, proved disastrous. The company became in- 
solvent in July, 1874, and its failure was the source of great distress 
among the poor negroes who had trusted the institution fathered by the 
Government. The depositors numbered 72,000, scattered over thirteen 
States. The liabilities at the time of failure were $3,037,560; the 
amount paid creditors, after a delay of several years, finally amounted 
to sixty-two per cent, of their claims. 38 

Comptroller Knox's Criticism of Some of the Trust Companies. 

Among other companies that suspended during the panic of 1873 
were the Brooklyn Trust Company, the Union Trust Company, the 
National Trust Company, and the Warehouse Security Company, of 
New York. 39 The loose methods pursued by many financial institutions, 
and the craze for speculation and money-getting, which were largely 
responsible for the panic, called the attention of the Comptroller of the 
Currency to the different kinds of banking organizations. Among these 
the trust companies did not escape his attention. In his report for 
1873-74 the Comptroller (Hon. John J. Knox) says: 40 "Trust and loan 
companies are usually organized, by special State statutes, in the large 
cities. Their capitals, deposits and business are quite large in amount. 
Reports are not required, and inadequate when given. For instance, 
one of the largest of these institutions has published but one report in 
the year, and that report contains only a statement of its assets, without 
any mention of the amount due to its depositors, or of any of its liabilities. 
The Bank Superintendent of New York, in reply to an inquiry in refer- 
ence to these institutions, says (under the date of July 31, 1873): 'The 
trust companies of New York are peculiarly situated. Some are under 
the control of the Comptroller of the State; but the great majority of 
them are under no sort of supervision. * * * This class of corpora- 
tions has multiplied rapidly during the last few years. * * * I am 
not able to furnish a copy of the charter of any of these companies/ ' 
The Comptroller adds that he had received some reports from trust 
companies, but not enough to publish without making the report "de- 
lusive." He had better fortune the following year, and statistics of trust 
companies are found in the reports from 1875 on. In his report of 



38 Bankers Magazine, Vol. XXIX, p. 936, and Vol. XLII, p. 909; Keyes: His- 
tory of the Savings Banks of the United States, Vol. II, pp. 558 et seq. 

39 "Commercial and Financial Chronicle," July 26 and Aug. 30, 1873. Report 
of U. S. Comptroller, 1873, p, 00. 

40 Page XLIII. 



14 TRUST COMPANIES. 

1875-76, the Comptroller says that the reports from Philadelphia were 
furnished cheerfully by the officers of the companies, "although they ex- 
pressed doubt whether they could properly be classed as banking institu- 
tions." 41 If they are living now their doubts are probably removed. 
The Comptroller also says: "Several of the companies state that they 
hold very large values, amounting to many millions, in trust, which are 
not the property of the companies, and are not, therefore, returned by 
them as deposits proper." The same thing is true to-day, and for this 
reason statistics of trust companies do not convey a correct idea of the 
amount of property actually under their control. 

Proposed Public Supervision of the Companies. 

Agitation to bring the trust companies under some sort of supervision 
was going on at this time in several States. The Bank Commissioners 
of Connecticut, in their report for 1872, recommended that instead of 
!he annual returns to the Commissioners then required, there be quar- 
terly reports, and that same be published in the newspapers. 42 Such a 
law was enacted in 1872. 4S Connecticut had five trust companies at the 
beginning of that year. 

The Superintendent of Banking of New York, in his report of De- 
cember, 1873, recommended that the trust companies be brought under 
stricter State supervision. At this time some of them were under no 
supervision at all, while some reported either to the State Comptroller, 
the Superintendent, or to a Judge of the Supreme Court. 44 The Super- 
intendent's recommendation was adopted, and the companies were brought 
under his supervision in 1874. 

Competition Between Trust Companies and Banks. 

Evidences that trust companies were now beginning to attract some 
attention from the general public, and to cause considerable uneasiness 
among other classes of bankers, is found also in the increasing number 
of comments upon them in the financial papers as well as in the Reports 
of the Comptroller of the Currency. In The Bankers Magazine for 
January, 1874, 45 is found this statement regarding "Trust and Loan 
Companies": "They were intended as repositories for trust funds, for 
the accumulation of deposits to be loaned on mortgage, and for invest- 
ments in Government loans ; in other words, as savings banks on a large 
scale. Recently they have been converted into stock-jobbing concerns, 
apparently for the benefit of stock operators, and in large sums." The 
article refers to the remarks of the Comptroller of the Currency in his 
Report for 1873 (p. XLI.TI) already quoted. Two years later (April, 



41 Page LX. 

42 Bankers Magazine, Vol. XXVII, p. 256. 

43 Ibid., Vol. XXVIII, p. 184. 

44 Cat or, p. 51. 

45 Bankers Magazine, Vol. XXVIII, p. 520. 



HISTORY OF TRUST COMPANY MOVEMENT. 15 

1876), the same magazine has this to say: 46 "Recent events have led to 
some solicitude in regard to trust companies in this State, and the re- 
ports of these institutions have been scrutinized with unusual interest." 
On January 20, 1888, the "Commercial and Financial Chronicle" said:* 7 
"An important feature in our financial situation is the rapid extent dur- 
ing late years of the business of the trust companies of this State. Not 
very long ago their position was what their name implies — that is, in- 
stitutions for safely keeping and managing trust funds. More recently 
they have been running into a general banking business, and now hold 
a position not very unlike the joint-stock banks of London, which take 
deposits on interest, loan them out as best they can, while leaving to the 
Bank of England the burden of carrying the reserve. In a similar man- 
ner the trust companies are dependent upon the reserve of the associated 
banks, while becoming active competitors for general deposits, very large 
lenders of funds on collateral securities and the leading buyers of paper 
in the market. * * * If the future growth of these trust com- 
panies is to be measured by the past growth, it will not be long before 
they will carry deposits one-half or two-thirds as large as the banks." 
Two years later 48 the same periodical, referring to the Report of the 
New York Superintendent of Banking, remarked : "He says the number 
of trust companies has increased beyond the wants of the State, and a 
general law will be a benefit, by helping to check their multiplication. In 
all this the Superintendent only gives expression of the prevailing opin- 
ion. Trust companies are needful, but only for certain well-defined pur- 
poses; they are misnamed and in some cases misleading when, in the 
garb of a trust organization, they exercise the powers of a bank." 

Steady Development of the Thust Companies. 

Notwithstanding many such complaints as these, the trust company 
movement went steadily forward, and encroached more and more upon 
the field of the regular banks. To do this they had to overcome not 
only the hostile criticisms of the financial press, but the force of State 
legislation as well. In Pennsylvania, for example, the amendment to 
the Corporation Act in 18S1, 49 forbids trust companies to do a banking 
business. For many years the question was under discussion, whether 
Pennsylvania trust companies might legally receive demand deposits. As 
late as 1898 the Law Editor of The Bankers Magazine expressed the 
opinion that it was not legal for them to do so. 50 The companies actually 
did receive such deposits, however: and in 1900 their right to do so was 
established by decision of the United States Circuit Court of Pennsyl- 



4*6 Ibid., Vol. XXX, p. 777. 

47 Vol. XXXVI, p. 917. 

48 January 10, 1885. Vol. XL, p. 42. 

49 Laws of Pennsylvania, May 24, 1881. Act 26, sec. 1. 

50 Bankers Magazine, Vol. LVI, p. 100. 



16 TRUST COMPANIES. 

vania. 51 It is still illegal for Pennsylvania trust companies to discount 
commercial paper, but the} 7 may buy it! 

Another instance of encroachment upon the functions of banks in 
spite of questioned legality is furnished by the Missouri trust com- 
panies. In 1894 the Supreme Court of Missouri decided that trust com- 
panies are not banks, and may not receive deposits as banks. 52 This 
failed to settle the matter, however. Four years later the same court 
passed upon the question again, and concluded that trust companies may 
not receive demand deposits, unless they pay interest. 53 Hence the re- 
ceiving of demand deposits by trust companies in that State now has 
legal sanction. No rate being specified by the court, the payment of 
merely nominal interest would suffice, so far as the law is concerned. 
There is a law of competition, however, which is another thing. 

The examples just related illustrate how the trust company, unlike 
the National bank, has developed according to natural rather than arti- 
ficial laws. The law and its interpretation have been moulded to suit the 
ascertained needs of the business, instead of the business being moulded 
to conform to the law. There are those who believe that this process 
has evolved a more scientific system of banking than that of the banks 
themselves. 

General Statutes Regulating Trust Companies. 

During the decade of the eighties the growing attention to the trust 
company as an institution was further evidenced in some of the States 
by the passage 54 of general laws regarding this class of institutions. 
New York passed such a law in 1887, since which time companies have 
usually been incorporated under the general law, although some have 
been organized under special acts. 55 We have already referred to the 
Corporation Act of 1881 in Pennsylvania, which dealt with trust com- 
panies. It was further amended in 1885. 56 Illinois passed a trust com- 
pany law in 1887- 57 Several States passed laws during this period for 
the purpose of regulating or restricting the business of trust companies. 
This subject will be discussed more at length in a subsequent chapter. 

Growth of the Companies tn Numbers and Resources. 

Returning now to the consideration of the growth of trust companies 
in number and resources, the task is much simplified by the availability 



51 Cator, p. 18. Bankers Magazine, Vol. LXII, p. 561. 

52 Bankers Magazine, Vol. L,, p. 60. 

53 Ibid., Vol. LVII, p. 16. 

54 The tendency to the passage of general laws was not confined to trust 
companies, however, but extended to other State banking institutions. See "State 
Banking in the United States," by George E. Barnett, p. 22 and passim. 

55 Circular published in 1900 by the New York Superintendent of Banks, giv- 
ing historical sketch and digest of banking laws. 

56 Act of June 11, 1885. 

57 Act of June 15, 1887. 



HISTORY OF TRUST COMPANY MOVEMENT. 17 

of statistics which; while incomplete, furnish the means of forming a 
tolerably accurate idea of the progress of these institutions. 

From the year 1875 on, the reports of the Comptroller of the Cur- 
rency give statistics of the trust companies reporting to that official. 
These reports do not include all of the trust companies in existence at 
their several dates, as the Comptroller had no authority to compel the 
sending of returns from State institutions. The number of companies 
reported for the year ended June 30, 1875, was thirty-five. This num- 
ber is, of course, somewhat less than the number actually doing business, 
and it is impossible to learn the exact number. The United States 
Mortgage and Trust Company, of New York, has annually, since 1903, 
published a book entitled "Trust Companies of the United States," which 
gives complete returns from practically all of the trust companies in ex- 
istence, with the dates of their organizations. An examination of this 
work shows that of the companies reported, fifty had been • organized 
during or before the year 1875. But, as the writer has ascertained by 
correspondence with these companies, some of them were not organized 
at first as trust companies. On the other hand, as already shown, a 
number of trust companies organized in these early years have gone into 
liquidation, and their names do not appear in the book above mentioned. 
A rough estimate, however, shows that these two considerations about 
offset each other, and the number of companies in existence in 1875 was 
probably nearer fifty than thirty-five. The former number is insignifi- 
cant enough as compared with the other financial institutions at that 
time. As against the thirty-five trust companies, there were in 1875, 
according to the Report of the Comptroller of the Currency for that 
^car, 551 State banks, 771 Savings banks and 2,087 National banks. 
The trust companies had deposits of $85,000,000, while the State banks 
had $166,000,000, the Savings banks $924,000,000 and the National 
banks $679,000,000. 

Of the thirty-five trust companies reported, New York State had 
twelve, Connecticut ten, Pennsylvania seven, Massachusetts five and 
Rhode Island one. The incompleteness of this list is shown by the fact 
mentioned by the Comptroller, that while Illinois is credited with no 
companies in the list, the. Financial Editor of the "Chicago Tribune" 
reported that there were in Chicago, June SO, 1875, five trust companies, 
with aggregate deposits of $5,68 8,5 74. 58 

A general idea of the growth of trust companies from this time on 
will be gained most easily by reference to the charts presented herewith. 
Chart A is designed to show the growth in the number of trust companies 
year by year. The heavy line follows the number of companies report- 
ing to the Comptroller of the Currency each year. The dotted line in- 
dicates the approximate number of companies in existence each year as 
shown by figures compiled by the writer from the work "Trust Compa- 



ss Report of U. S. Comptroller. 1875. p. XCVII. 

2 



18 



TRUST COMPANIES. 



nies of the United States" already mentioned. Prior to 1903, the fig- 
ures are estimates; since that date they represent the actual number of 
companies reported. 

The lines do not show the total number of trust companies in exist- 
ence at any given date, as neither authority succeeded in getting re- 
ports from all the companies. An average of the courses of the lines 
does indicate pretty accurately, however, the relative gain from year 
to year in the number of companies, and this is the essential thing the 
chart is intended to show. 

It will be noticed that the general trend of the two lines is much 
the same down to about 1903. The dotted line shows the more rapid 
increase from 1903 to 1907; while from 1907 to 1913, more rapid and 
regular increase is indicated by the heavy line. These inconsistencies 
are undoubtedly due to different degrees of success in getting reports 
from the companies. 



CHAR? A, showing growth in the number of Trust companies, 

As reported by The comptroller of the Currency , 

As compiled from "Trust Companies of The United 

States": ( Estlnates to 1902, aotual figures since), 



1875 - 191S. 



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HISTORY OF TRUST COMPANY MOVEMENT. 19 

Following the general trend of the lines, and averaging their 
courses, it will be seen that there was a moderate increase in the num- 
ber of companies beginning about 1885, which continued till 1891. From 
1891 to 1899 the increase was at a slower rate. Beginning in 1899 the 
number of companies grew very rapidly up to 1907, and a little less 
rapidly since that year. 

The following table shows the number of companies at the dates 

given : According to According to 

Comptroller's "Trust Companies of the 

Year. Reports. United States." 

1875 35 50 

1880 30 54 

1885 40 99 

1890 149 255 

1895 242 364 

1900 290 518 

1905 683 1156 

1910 1091 1527 

1913 1515 1732 

The striking thing about the table is the remarkable growth in the 
number of companies since the year 1900. While the number of com- 
panies doubled between 1890 and 1900, during the decade from 1900 to 
1910 the number increased 801, or 276 per cent., according to the 
Comptroller's figures, and 1,009, or 194 per cent., according to the other 
authority. The increase in the thirteen years since 1900 was 1,225 
companies, or 422 per cent., based on the Comptroller's figures, and 
1,214 companies, or 234 per cent., based on the other figures. The lat- 
ter percentage is probably nearer the fact, because the number of com- 
panies given for both 1900 and 1913 is more nearly correct. Based 
upon the best statistics obtainable, the actual number of trust companies 
in the country about June 30, 1913, was between 1,950 and 2,000.* 

Comparative Growth or Banks and Trust Companies. 

Chart B shows the growth of individual deposits of Trust Compa- 
nies, and also of savings banks, State banks and national banks. 

An interesting thing is the coincidence in the general features of 
the lines showing deposits of trust companies and of State banks up to 
1902. In 1909 for the first time the deposits of trust companies ex- 
ceeded those of the State banks, and they have more than kept the 
lead since that year. It is also to be noted that from 1897 all four 
classes of financial institutions had increases of deposits much greater 
than ever before. This does not seem to corroborate the popular im- 
pression that the trust companies are making their gains by taking 
business from the regular banks. It rather indicates that the trust 
companies are sharing with the others in a general prosperity that is 
unprecedented. 

The following table gives the individual deposits of the same four 
classes of institutions for the years named, as reported by the Comp- 
troller of the Currency: 

*As we go to press, the figures of "Trust Companies of the United States'" 
for 1914 are available, showing 1.812 companies with aggregate resources or 
$5,924,979,890. 



20 TRUST COMPANIES. 

Trust Slate Savings National 

Year. Companies. Banks. Banks. Banks. 

1875 $85,000,000 $166,000,000 $924,000,000 $679,000,000 

1880 90,000,000 200,000,000 819,000,000 888,000,000 

1885 188,000,000 344,000,000 1,095,000,000 1,117,000,000 

1890 336,000,000 553,000,000 1,525,000,000 1,594,000,000 

1895 547,000,000 712,000,000 1,811,000,000 1,715,000,000 

1900 1,028,000,000 1,267,000,000 2,450,000,000 2,602,000,000 

1905 1,980,000,000 2,365,000,000 3,093,000,000 § 3,882,000,000 

1910 3, 073,000,000 2,728,000,000 4,070,000,000 5,287^000,000 

1913 3,571,000,000 3,081,000,000 4,726,000,000 5,953,000,000 

It thus appears that during the ten years from 1890 to 1900, the 
Trust Companies gained in individual deposits $692,000,000, or about 
206 per cent.; the State Banks, $714,000,000, or about 129 per cent.; 
the Savings Banks, $925,000,000, or about 6l per cent., and the Na- 
tional Banks, $1,008,000,000 or about 63 per cent. The amount of the 
gain for Trust Companies was less than that for the other classes of 
institutions, but the percentage of gain was much larger. 

The gains for the decade 1900-1910 were as follows: Trust Com- 
panies, $2,045,000,000, or 199 per cent.; State Banks, $1,461,000,000, 
or 115 per cent.; Savings Banks, $1,620,000,000, or 66 per cent.; Na- 
tional Banks, $2,685,000,000, or 108 per cent.; the Trust Companies 
ranking first in percentage, and second in amount of gain. 

During the thirteen years since 1900, the Trust Companies made a 
gain of $2,543,000,000, or 247 per cent.; the State Banks $1,814,000,- 
000, or 143 per cent..; the Savings Banks $2,276,000,000, or 93 per 
cent.; the National Banks $8,351,000,000, or 129 per cent. Here again 
the Trust Companies rank first in percentage and second in amount of 
gain. 

As regards a comparison of the figures for Trust Companies and for 
the other financial institutions named, it is important to bear in mind 
that the reports of the Comptroller give the statistics for all National 
banks, and that said reports are probably more complete for State 
Banks and for Savings Banks than for Trust Companies. Thus, 
the Comptroller's report for 1907 gives the total resources of 
the Trust Companies of the country as 3,073 millions, where- 
as the figures given by "Trust Companies of the United States" is 
4,285 millions. The Comptroller's report for 1907 contains figures for 
but one Western State, — Kansas, and for but one Southern State, — 
Kentucky. It omits a number of important Trust Company States, 
among which are California and Ohio, the combined resources of whose 
Trust Companies in' 1907 were not less than 324 millions. This incom- 
pleteness is not the fault of the Comptroller, but is due to the fact that 
he has no authority to compel the making of reports of Trust Com- 
pany statistics by the different States. 59 



59 As another instance of incompleteness, take the Report for 1897. Two 
hundred and fifty-one companies are reported, with total deposits of $566,922,205. 
But the Comptroller calls attention to an investigation made by the New York 
Financier of returns nearest to January 1, 1897, showing 458 companies, with de- 
posits of $675,100,000. (See Comptroller's Report 1897, page XXXVIII.) 



HISTORY OF TRUST COMPANY MOVEMENT. 21 



CHXRT B, showing growth of Individual deposits of banks and trust 
ooapar.les lr. The United states, ie75 - 1913, as given In the Reports 
of the Comptroller of the Currency . 



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22 



TRUST COMPANIES. 



BANK AND TRUST COMPANY SUSPENSIONS, 1893-1913 

(Figures furnished by Bradstreet's.) 

NUMBER OF COMPANIES SUSPENDED. 

Loan 





National State 


Savings 


Private 


and Trust 




Year. 


Banks. Banks. Banks. 


Banks. 


Companies. 


Totals. 


1893 


154 


184 


50 


196 


14 


598 


1894 


24 


36 


8 


18 


3 


89 


1895 


21 


57 


18 


37 


2 


135 


1896 


42 


65 


20 


62 


8 


197 


1897 


21 


24 


17 


41 


2 


105 


1898 


4 


12 


5 


28 


2 


51 " 


1S99 


7 


5 


5 


18 


2 


37 


1900 


3 


8 


2 


30 


m m 


43 


1901 


5 


13 


6 


32 


, , 


56 


1902 




S 


3 


16 


2 


29 


1903 


11 


28 


1 


44 


6 


90 


1904 


16 


23 


10 


43 


4 


96 


1905 


15 


14 


5 


25 


4 


63 


1906 


4 


19 


2 


17 


3 


45 


1907 


14 


28 


6 


24 


17 


89 


19i08 


18 


35 


9 


55 


15 


132 


1909 


5 


10 


1 


18 


6 


40 


1910 




19 


4 


13 


o 

o 


44 


1911 


2 


33 


1 


20 


5 


61 


1912 


4 


16 


2 


23 


3 


48 


1913 


11 


319 


3 


22 


5 


80 


Totals 386 


676 


178 


782 


106 


2128 






INDICATED TOTAL ASSETS 








National 


State 


Savings 


Private 


Loan & Trust 




Year. 


Banks. 


Banks. 


Banks. 


Banks. 


Companies. 


Totals. 


1893 .. 


.$84,493,433 


$43,168,979 


$18,763,938 


$23,497,164 


$14,357,500 


$184,281,014 


1894 .. 


. 3,485,650 


2,773,724 


3,029,508 


1,186,750 


510,000 


10,985,632 


1895 .. 


. 3,172,894 


3,891,852 


10,161,649 


1,510,000 


155,000 


18.891,395 


1896 .. 


. 22,951,523 


7,521,269 


8,119,000 


5,024,040 


3,892,279 


47,508,111 


1897 .. 


. 6,721.000 


2,401,150 


3,867,098 


2,369,714 


375,000 


15,733,962 


1898 .. 


. 2,701.680 


1,791,100 


1,196,300 


1,555,254 


5.074,486 


12,318,820 


1899 . . 


. 9,822,222 


168,000 


821,332 


1,893,072 


4,778,000 


17,482,626 


1900 .. 


. 1,025,000 


1,131,396 


381,000 


1,373,114 




3,910,510 


1901 .. 


. 4,753,105 


1,312,000 


596,000 


3,537,880 




10,198,985 


1902 . . 




348,000 


2,908,012 


597,709 


28,765 


3,882,486 


1903 . . 


. 8,537,907 


2,187,391 


35,000 


3,732,557 


12,764,000 


27,256,855 


1904 .. 


. 6,392,424 


2,939,855 


1,578,068 


3,498,700 


1,523,575 


15.932,622 


1905 .. 


. 6,639,000 


1,365,100 


2,028,776 


2,015,920 


6,390,055 


19,438,860 


1906 .. 


. 1,705,000 


2,768,815 


25,000 


4,075,320 


4,490,000 


13,064,135 


1907 .. 


. 42,522,429 


19,678,339 


7,191,686 


14,879,942 


104,192,210 


188,464,606 


1908 . . 


. 19,901,000 


25,369,'0'O4 


1,003,702 


11,148,495 


9,313,671 


66,735,872 


1909 .. 


. 1,278.000 


1,194,194 


52,000 


1,629,820 


5,051,0010 


9,205,014 


1910 .. 


. 3,579,461 


15,507,910 


2,021,183 


3,410,624 


172,000 


24,691,178 


1911 .. 


. 3i, 3(00, 000 


3,422,093 


40, OOiO- 


2,772,131 


10,925,000 


20,459,224 


1912 .. 


455,000 


1,416,504 


114,000 


2,011,688 


1,251,928 


5,249,120 


1913 . . 


. 34,830,156 


4,812,798 


465,O0'0i 


2,688,920 


2,284,300 


45,081,174 


Totals 


$268,266,884 


$145,169,473 


$64,398,252 


$94,408,823 


$187,528,769 


$759,772,201 






ESTIMATED LIABILITIES. 






1893 .. 


.$68,687,994 


$38,138,323 


$18,152,136 


$22,929,225 


$22,38S,000 


$170,295,678 


1894 .. 


. 4,315,900 


3,484.600 


3,445,000 


1,712,450 


1,012,000 


13,969,950 


1895 . . 


. 3,971,462 


4,922,631 


11,167,S87 


2,537,718 


165,000 


22,764,698 


1896 . . 


. 27,544,250 


9,933,742 


8,457,000 


6,654,670 


4,089,372 


56,679,034 


1897 .. 


. 7,920,999 


3,060,811 


5,077,222 


4,085,477 


550,000 


20,694,500 


1898 . . 


. 2,962,863 


2,479,000 


1,331,627 


2,822,890 


6,401,412 


15,997,792 


1899 . . 


. 12,094,572 


215.000 


1,322,737 


4,847,261 


6,025,000 


24,504.570 


1900 . . 


. 1,965,304 


1,475,855 


462,649 


4,683,660 




8.587,468 


1901 . . 


. 5,684,720 


1,984,053 


792,725 


7,161,339 




15.622,837 


1902 . . 




825,542 


3,821,762 


1,709,773 


51,661 


6.408,738 


1903 . . 


. 9,445,199 


2,746,533 


235,000 


7,286,777 


14,438.168 


34,151,677 


1904 . . 


. 7,767,424 


4,362,442 


1,972,000 


5,481,200 


2,756,300 


22.339,366 


1905 .. 


. 9,,260,277 


2,209.887 


2,613,776 


3,089,423 


6,846,377 


24.019.740 


1906 . . 


. 2,829,000 


5,457.503 


45,000 


6,822.952 


7,725,000 


22,879.455 


1907 . . 


. 39,201,694 


19,852,940 


6,674.071 


22,199,622 


118,338,036 


206.266,363 


1908 .. 


. 23,344,200 


28,446,958 


1,312,182 


27.S74,197 


12, 5 4 7, 8'7H 


93,525.408 


1909 . . 


. I,32i0y000 


1,426,814 


63,000 


4,632,514 


4,185.000 


11,627,328 


1910 .. 


. 4,490,274 


17,996,310 


2,487,136 


6,485.654 


276,000 


31.735,374 


1911 . . 


. 3,3169,000 


4,992,824 


66,516 


5,390,996 


12,373,000 


26,192,336 


1912 .. 


. 1,044,000 


1,915,356 


330,000 


2,936,025 


2,711,590 


S, 936, 971 


1913 .. 


. 43,751,569 


6,138,618 


373,000 


9,709,406 


2,501,860 


62,474,453 


Totals 


$280,970,701 


$162,065,742 


$70,702,426 


$161,053,2)29 


$225,381,647 


$899,673,745 



HISTORY OF TRUST COMPANY MOVEMENT. 23 

Failures of Trust Companies. 

Statistics regarding failures and suspensions of trust companies are 
not obtainable prior to the year 1893, that being the year in which such 
reports were begun by the Bradstreet Company. The accompanying 
tables, furnished through the courtesy of "Bradstreet's," show the num- 
ber of suspensions reported, and the estimated assets and liabilities in- 
volved therein for the years 1893-1913 inclusive. 

As to the number of failures, the table shows that during the twenty- 
one years there were 2,128 suspensions, of which the National banks 
contributed 386, the State banks 676, the savings banks 178, the private 
banks 782, and the "loan and trust companies" 106. It thus appears 
that the average number of suspensions per annum for the different 
classes of institutions was as follows: 

National banks 18.4 

State banks 32.2 

Savings banks .' 8.5 

Private banks ; . . . 37.2 

Loan and trust companies 5. 

The average number of National banks during the twenty-one years 
covered was 5,039. According to the best figures obtainable, the aver- 
age number of the other institutions during these years was about as 
follows: State banks, 7,400; Savings banks, 1,290; Loan and trust com" 
panies, 1,000. On this basis, the percentage of failures (or the ratio of 
the number of companies failing to the number of companies in busi- 
ness) was approximately as follows: 

National banks 36-100 of 1 per cent. 

State banks 43-100 of 1 per cent. 

Savings banks 66-100 of 1 per cent. 

Loan and trust companies .... 50-100 of 1 per cent. 

From these figures it appears that the record of trust companies as 
to the number of failures does not compare unfavorably with that of the 
other institutions. 

Regarding the losses involved in the failures, the showing of the 
trust companies is, on the face of the figures, not so good, the losses as- 
signed to them exceeding those of the other institutions, except the private 
banks. The figures represent, however, not the ultimate losses, but the 
Lest estimates of the probable results obtainable at the time. An ex- 
amination of the figures for the year 1907, which account for 52 per 
centum of the entire estimated liabilities for the twenty-one years, 
shows that they give a greatly exaggerated idea of the actual losses 
involved. Of the 17 trust companies reported suspended in 1907, 
about one'half re-opened for business, while several others were 



24 TRUST COMPANIES. 

liquidated without loss to depositors. These include the larger 
companies which suspended, with one exception. As to the fig- 
ures involved, three companies, — the Knickerbocker Trust Company of 
New York, the Union Trust Company of Providence and the California 
Safe Deposit and Trust Company of San Francisco, — account for con- 
siderably over $100,000,000 of the $118,000,000 liabilities shown in the 
table, and the first two of these have long since resumed business and are 
to-day prospering, no loss to depositors having resulted. One competent 
authority estimates the actual losses due to failures of trust companies 
during the 3^ear following the panic of 1907 at about five and one-half 
million dollars, of which eighty per centum was due to the failure of one 
company, — the California Safe Deposit and Trust Company. 

New York having been the storm center of the panic of 1907, it is 
significant that on August 10, 1908, the Superintendent of Banking of 
the State of New York, Clark Williams, reported — "So far as the records 
of this Department are concerned, we know of no case of a failure of a 
trust company resulting in loss to the depositors."* 

So far as the safety of trust funds is concerned, the statement made 
some years ago at a meeting of the Trust Company Section of the Ameri- 
can Bankers' Association, that not a dollar of trust funds has ever been 
lost through a trust company, has never been disputed, so far as the 
writer knows. 

Especial interest attaches to the record of trust companies during and 
since the panic of 1907, because it was the first severe strain that has 
been undergone by these institutions since their great development began. 
On the whole, the record must be pronounced very satisfactory. Al- 
though subjected to a strain that was unprecedented, their record com- 
pares favorably with that of other classes of financial institutions. The 
failures which occurred were in no sense ascribable to any inherent 
weakness in the trust company as an institution; but are accounted for in 
some cases by the dishonesty of officials and by undue laxity of the State 
laws under which they operated, and in others by pressure of circum- 
stances which could not be overcome by any kind of banking institution. 
The same causes brought about the downfall of other financial institu- 
tions^ including National banks, and State banks in States having the best 
laws for their regulation and control. The panic of 1907 did, however, 
emphasize the necessity of careful and intelligent State regulation and 
control of trust companies, as well as of the other banking institutions. 

The statement on the next page gives the aggregates of the principal 
items in trust company reports from 1875 to 1913. This table contains 
data from which a careful study may be made of various items of man- 
agement as developed during the last quarter century. In the following 
table will be found figures dealing with a few of the important sub- 
jects. 



* Trust Companies Magazine, August, 1908, p. 495. 



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25 



26 



TRUST COMPANIES. 



Some Items of Resources and Liabilities of Trust Companies, 

1875-1913. 



Year. 

1S75. 

1876. 

1877. 

1878. 

1879. 

1880. 

1881. 

1882. 

1883. 

1884. 

1885. 

1886. 

1887. 

1888. 

1889. 

1890. 

1891. 

1892. 

1893. 

1894. 

1895. 

1896. 

1897. 

1898. 

1899. 

1900. 

1901. 

1902. 

1903. 

1904. 

i905. 

1906. 

1907. 

1908. 

1909. 

1910. 

1911 . 

1912. 

1913. 



Cash and 
Deposits and due from 
due to banks. banks. 



$85,147,012 

87,969,758 

84,549,038 

73,658,004 

76,013,662 

90,158,637 

111,905,527 

144,988.775 

165,645,521 

189,507,810 

188,615,186 

214,255,658 

245,797,608 

259,925,079 

302,626,471 

339,319,740 

357,540',852 

415,431,461 

488,934,555 

478,065,823 

553,756,721 

592,617,492 

576,598,940 

665,488,712 

837,510,725 

1,031,735.272 

1.278.849,880 

1.537,476,616 

1,711,485,439 

1,775,499,356 

2,164.645,572 

2,162,228,621 

2,229,495,792 

2,029,978,992 

3,112,588.489 

3,260,264.5S2 

3.615.224.149 

3,974,516,696 

3,863,253.808 



$10,856,621 

8,671,619 

10,826,606 

8,399,209 

8,727,670 

7,536,459 

12,454,392 

11,492,036 

13,431,867 

21,030,441 

33,499,518 

35,804,622 

35,617,727 

39,580,220 

50,320,566 

53,168,165 

56,430,480 

77,575,370 

75,568,610 

125,010,202 

128,482,531 

108,314,257 

118,139,249 

118,317,178 

154,868,308 

219,448,611 

217,207,097 

264,819,327 

304,409.977 

442,876,289 

393,880,801 

369,199,366 

368,738,970 

515,850.773 

851,821.325 

754,147,552 

909,194.893 

939,499,036 

885,751,995 



W 
0) 

P.c 

12.8 
9.9 
12.8 
11.4 
11.5 
8.4 
11.1 
7.9 
8.1 
11.1 
17.7 
16.7 
14.5 
15.2 
16.6 
15.7 
15.8 
18.7 
15.4 
26.1 
23.2 
18.3 
20.5 
17.8 
18.5 
21.3 
17.0 
17.2 
17.7 
24.9 
18.2 
17. 
16.6 
25.4 
27.4 
23.1 
25.2 
23.6 
23. 



m 

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o 2 

Q, TO i— i 

o 0| 3 

£ B 

P.c. 

10.6 
3.4 
3.3 
3.9 
3.6 
3.7 
3.9 
2.4 
2.3 
2.4 
5.3 
9.1 
6.8 
7.6 
8.3 
5.9 
4.6 
5.4 
4.5 
7.2 
6.5 
4.9 
5.1 
3.4 
2.9 
2.9 
2.0 
2.2 
3.0 
3.6 
3.1 
3.7 
4.9 
6.1 
8.8 



Total 
loans. 



Total in- 
vestments. 



$65,900,174 $39,409,904 
76,608,647 35,338,884 
67,946,390 37,765,945 
59,303,327 36,741,697 
61,171,877 34,841,0186 
74,675,537 37,654,325 
101,906,566 33,057,627 
132.054,203 42,813,068 
140,022,358 47,760,410 
158,018,009 51,250,942 
141,542,649 55,126,600 
156,828,458 71,802,374 
196,0^96,830 72,927,742 
250,700,648 72,578,913 
291,450,367 76,725,017 
327,882,540 95,707,496 
356.876,320 93,973,321 
385,273,548 106,206,778 
462,729,597 128,824,901 
374,421,713 142,224,151 
433,386,461 177,086,555 
462,0)00,949 201,164,551 
445,629,725 201,128,020 
539,162.445 193,977,752 
599,031.033 266,086,873 
727,952,137 325,841,086 
939,768,891 396.222,854 
1,192,488,311 447,580,690 
1,303,237,200 579,459,699 
1,147,605,557 667,511,015 
1,549,286,662 787,918,435 
1,609,467,839 760,285,420 
1.601,364,237 785,999,670 
1.379,481,474 775,875,271 
2,064,666,504 1,459,104,066 
8.8 2,256,572,911 1,542,241,676 
8. 2,429,421,081 1,114,778,687 
8.4 2,711,241,748 1,219,139,446 
8.6 2,767,346,175 1,191,019.632 



Surplus and 
undivided 
profits. 

$7,550,560 %i 

8,823,200 

8,404,212 

8,616,954 

9,194,570 

10,245.051 

11,175,663 

14,212,161 

15,601.710 

19,810.611 

19,203,984 

24,520,701 

27,193,319 

35,951,687 

38,783.114 

46,828.003 

55,503,845 

61,768,148 

70',771,477 

75.303,366 

84,801,698 

84,313,612 

89,025,267 

97,643,666 

105,616,167 

148,389,339 

168,284,468 

225,524,514 

314,496,334 

329,789,576 

363,515.702 

395,373,620 

397,865.026 

416,039,899 

493,3S2,193 

498,166,836 

538,870,453 

560.741,978 

574,369,239 



- c 
S c 



$3,511,148 
3.359,110 
3,169,551 
3.166,960 
3,494.061 
4.229,889 
5.049,809 
6,093,307 
6.245,370 
6,853.477 
6,209,742 
6,626,538 
5,502,166 
3,197.112 
3,677,237 
3,381,217 
3,13^8,177 
3,572,886 
3.187,125 
3,148,156 
3,334,971 
3,289,547 
3,361,409 
3.831,147 
4,121,254 
4,586,760 
4,835,274 
4,755,911 
4,328,727 
4,068,868 
4,196,159 
3,988,181 
3.868,286 
3.403,376 
3,770,653 
3,865,124 
3,729,105 
3,622,3i0'l 
3,382,126 



Reserves of Trust Companies. 

Of special interest, in view of the recent agitation of the question in 
New York and elsewhere, is the subject of trust company reserves. The 
third column of the table gives the reserve carried by the companies each 
year, the figures representing the proportions of the amounts in the sec- 
ond column to those of the same years in the first column. From 1875 
to 1884 inclusive the per cent, of reserve never exceeded 12.8, the lowest 
reserve reported being in 1882, when it was only 7-9 per cent. After 1884 
the reserve reported was materially higher, never going lower than 14.5 
per cent, (the figure for 1887), and reaching its maximum with 27.4 
per cent, in 1909. The average reserve for the thirty-nine years was 
about 17.3 per cent. From 1908 to 1913 inclusive it averaged 24.6 
per cent. 

The criticisms against the trust companies as to reserve have, how- 
ever, been directed more especially towards the amount of actual cash 
carried in the vaults of the companies. Tn the fourth column of the 



HISTORY OF TRUST COMPANY MOVEMENT. 



27 



table are given the percentages of such cash reserves for tjie several 
years (including as cash the amount reported for cash items) the figures 
representing the proportion of cash and cash items to total deposits. 
For the thirty-nine years the average of such cash reserve has been a 
little over 5.1 per cent. It was highest in 1875, with 10.6 per cent., 1886 
being next, with 9-1 per cent. The lowest percentage was in 1901 — 2 
per cent. From 1876 to 1884 inclusive it ranged from 2.3 per cent, to 
3.9 per cent. From 1885 to 1897 it was somewhat higher, averaging 
about 6.2 per cent. From 1897 to 190S inclusive it averaged 3.4 per 
cent., and since that year 8.5 per cent. 

Increase in Surplus and Undivided Profits. 

A noticeable thing has been the tendency to increase in the surplus, 
and undivided profits as compared with the capital. This has been due 
m part to the accumulation of earnings, and in part to the tendency 
in organizing new companies to have a large surplus paid in at the start. 
Most of the States that have any legislation on the subject require the 
accumulation of a surplus fund until it reaches a certain percentage of 
the capital stock; but the accumulation has gone far ahead of any legal 
requirements. Chart C shows the relative growth of these two items, the 
heavy line representing the capital, and the dotted line the sum of sur- 
plus and undivided profits. During 1899 the latter became greater than 



CHART C, showing growth of capital and of surplus and undivided profits 
of the Trust Companies of The United states, as given in the Reports of 
the Comptroller of the Currency, from 1B75 to 191S. 

























capital 
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28 



TRUST COMPANIES. 



the capital, and has increased in greater ratio since then. 

The average resources of the companies appear to have been greatest 
during the years 1881 to 1887. The writer has been unable to find any 
special reason for this. It might have been due to reports being received 
mainly from the larger institutions. During the greater part of the time 
the resources have averaged from three to three and a half millions. 
From 1899 to 1905, inclusive, the averages exceeded four millions. 

Statistics of Trust Companies in the Various States. 



The following table gives the numbers and aggregate resources of 
trust companies in the various States and Territories on or about June 
30, 1913, according to the figures of "Trust Companies of the United 
States" and the Comptroller of the Currency. The reader is reminded 



AS REPORTED IN 
"TRUST COMPANIES 
OP THE UNITED 

STATES." 

Number of Aggregate 

State. Companies. Resources. 

Alabama 30 $25,554,640 

Arizona 11 6,705.605 

Arkansas 41 19,330.809 

California 28 215,333,632 

Colorado 20 6,744,185 

Connecticut 37 51,724,907 

Delaware 16 18,148,615 

District of Columbia 7 51,558,508 

Florida 12 6,642,214 

Georgia 25 27,137,232 

Hawaii 5 2,107,329 

Idaho 13 3,944.546 

Illinois 103 554,123,045 

Indiana 120 96,668,850 

Iowa 15 10,806,289 

Kansas 5 2,426,796 

Kentucky 52 37,695,897 

Louisiana 31 77,120,226 

Maine 42 55,988,856 

Maryland 22 75,501,254 

Massachusetts 61 367,669,460 

Michigan 6 20,924,115 

Minnesota 5 8,699,478 

Mississippi 16 7,466,347 

Missouri 55 172,248,304 

Montana 8 10,396,496 

Nebraska 11 2,682.614 

Nevada 1 1,490,347 

New Hampshire 5 4,089,477 

New Jersey 95 263,849,137 

New Mexico 12 2,807,614 

New York ^.. . 80 1,673,684,876 

North Carolina 47 27,260,863 

North Dakota 2 599,957 

Ohio 65 284,210,970 

Oklahoma 9 1,005,547 

Oregon 18 15,403,585 

Pennsylvania 274 877,625,216 

Rhode Island 13 130,991,216 

South Carolina 21 6,556, 922 

South Dakota 13 4,627,462 

Tennessee 76 47,441,062 

Texas 78 61,827,303 

Utah 8 12,906,500 

Vermont 35 41,253,977 

Virginia 21 17,373,767 

Washington 24 43,814,243 

West Virginia 212 21,850,157 

Wisconsin 11 11,038,2319 

Wyoming 5 1,021,509 

Totals 1732 $5. 478,080,225 



AS REPORTED BY 
THE COMPTROLLER 
OF THE CURRENCY. 



Number of 


Aggregate 


Companies. 


Resources. 


(June 4, 


1913) 


14 


$22,108,447 


11 


7,325,700 


25 


13,583,020 


6 


10,436,646 


21 


28,397,816 


38 


47,798,301 


16 


17,369,380 


7 


51,445.247 


9 


6,133,379 


22 



11 


22,78'3i,534 


3,144,331 


53 


579,205,574 


134 


118,510,070 


16 


10,370,989 


6 


2,477,540 


45 


27,265,801 


23 


51,461,930 


45 


61,650,500 


20 


74,765,541 


67 


351,228,767 


6 


18,813,521 


5 


8,616,634 


19 


11,309,787 


58 


169,770,600 


9 

1 

102 


14,951,937 


713,636 


270,272,722 


3 


1,019,896 


80 


1,662,025,118 


21 


18,406,236 


3 


848,923 


68 


313,888,664 


13 


1,900,012 


14 


5,398,241 


288 


784,259,921 


13 


130,500,231 


16 


5,627,035 


10 


2.256,747 


18 


25,924,530 


74 


48,504,396 


1 


2,592,404 


32 


34,774,737 


11 


12,514,245 


24 


37,566,544 


21 


21,89*8,895 


12 


11.643,211 


4 


458,857 


1515 


$5,123,920,197 



HISTORY OF TRUST COMPANY MOVEMENT. 



29 



that the lists intend to include all companies bearing the name of 
"Trust Company" or "Loan and Trust Company" from which reports 
could be obtained; and that many of these companies do a State banking 
business only, performing no trust functions: 

It will be seen that in the number of companies Pennsylvania is far 
in the lead; and as a matter of fact, that State developed the trust com- 
pany movement earlier and more generally than any other. In the total 
resources of her companies, however, New York, which is fifth in the 
number of companies, is far ahead of any other State. The eighty com- 
panies in New York report resources of $1,673,684,876, an average of 
$20,921,061 per company. The two hundred and seventy-four Pennsyl- 
vania companies show total resources of $877,625,216 — an average of 
$3,203,012 per company. The big average for New York companies is, 
of course, due to the great companies of New York city, the largest of 
which at this date, — The Guaranty Trust Company, — had resources of 
over two hundred and thirty-four million dollars. 

Trust Companies in the Larger Cities. 

The following table gives the numbers and aggregate resources of 
the trust companies in the cities of the United States having a popula- 
tion of over 100,000, according to the census of 1910. The figures are 
compiled from "Trust Companies of The United States," and are of 
the date June 30, 1913: 



Number of 
Companies 
Reporting - . 

Albany, N. Y 2 

Atlanta, Ga 6 

Baltimore, Md 11 

Birmingham, Ala 2 

Boston, Mass 22 

Bridgeport. Conn 2 

Buffalo, N. Y 3 

Cambridge. Mass 4 

Chicago, 111 34 

Cincinnati, 6 

Cleveland. 12 

Columbus, 3 

Dayton. 2 

Denver, Colo 8 

Detroit. Mich 3 

Fall River, Mass 1 

Grand Rapids, Mich.. 2 

Indianapolis, Ind 8 

Jersey City, N. J 11 

Kansas City, Mo 6 

Los Angeles, Cal 8 

Louisville. Ky 4 

Lowell, Mass 2 

Memphis, Tenn 13 

Milwaukee, Wis 3 



Number of 

Aggregate Companies Aggregate 

Resources. Reporting. Resources. 

$13,934,146 Minneapolis. Minn 2 5,883,2-3.2 

11.732,801 Nashville, Tenn 6 9,385,943 

69,058,495 Newark, N. J 9 51,482,249 

12,258,240 New Haven, Conn 2 5,318,704 

267,540,315 New Orleans, La 9 63,619,408 

3,319,604 New York, N. Y 35 1,463,922,814 

24,615,004 Oakland, Cal 3 5,720,119 

9,647,401 Omaha, Neb 4 2,094,889 

494,505,295 Paterson, N. J 5 16,372,565 

39,593,623 Philadelphia, Pa 56 433,022,486 

166,615,022 Pittsburgh, Pa 34 201,894,892 

6,668,220 Portland, Ore 7 12,841,659 

6,786,916 Providence, R. I .. 4 HO, 683, 549 

21.661.M1 Richmond, Va 5 8,683,345 

17.903.717 Rochester, N. Y 5 65,406,909 

3,283,588 San Francisco, Cal 5 80,766,828 

2,675,849 Scranton, Pa ,. . 3 4,369,767 

30,181,053 Seattle, Wash 7 17,459,988 

53,496,425 Spokane, Wash 6 17,375,757 

27,833,625 St. Louis, Mo i 16 126,49'3,906 

103,478,503 St. Paul, Minn 2 2,714,549 

17,355,772 Syracuse, N. Y 2 18,969,574 

2,416,072 Toledo, 8 21,261,690 

26,508.459 Washington. D. C 7 51,558,508 

5,394,198 Worcester, Massi 1 11,383,335 

There are nine cities in the above list, in each of which the aggregate 
resources of the trust companies exceed one hundred million dollars. 
These are, in the order of such resources, as follows: — 

New York $1,463,922,814 

Chicago 494,505,295 

Philadelphia 433,022,486 

Boston 267,540,315 

Pittsburgh 201,894,892 

Cleveland .' 166,615,022 

St. Louis 126,493,906 

Providence 110,683,549 

Los Angeles 103.478,503 



00 



TRUST COMPANIES. 



"i i The total resources of the trust companies in these nine cities is 
•$3,368,156,782, or nearly 62 per cent, of the total resources of all trust 
companies in the country. 

Comparison by Groups of States. 
An idea of the general distribution of the trust company business 
.throughout the country may be obtained by segregating the statistics by 
groups of States, as shown in the following table: — * 

Group of Number of Aggregate 

tvt ., S ^, tes -.. Companies. Resources. 

., North Atlantic 642 $3,456 877 122 

South Atlantic 193 252,029',50'-> 

North Central 411 1,169,056,179 

South Central 333 277,441,831 

Western 153 322,675,591 

Total s 1732 $5,478,080,225 

INDIVIDUAL TRUST COMPANIES HAVING RESOURCES OF OVER $?5 0-00 000 

. Name. EACH (JUNE 30, 1913.) Resources 

Guaranty Trust Co New York $234 639 S04 

Bankers Trust Co. New York 166',012.711 

Central Trust Co. of New York New York 124 368 776 

Farmers Loan and Trust Co New York 117'44l'342 

Illinois Trust and Savings Bank Chicago 107's39'678 

Equitable Trust Co. of New York New York 96*409*614 

Old Colony Trust Co Boston 93'416'334 

United States Trust Co. of New York New York 78'S'84'040 

Union Trust Co. . Pittsburgh 73!532!«5^ 

Union Trust Co. of New York New York 70 104 ° 80 

Columbia-Knickerbocker Trust Co New York 68'407835 

First Trust and Savings Bank Chicago 66'349'664 

Merchants Loan and Trust Co Chicago 65*672 654 

United States Mortgage and Trust Co.... New York 63493 ;3!17 

Citizens Savings and Trust Co Cleveland 5M9l'299 

New York Trust Co New York 56,564.732 

Industrial Trust Co Providence 54,146.721 

Fidelity Trust Co Philadelphia 51,372,2.0® 

Girard Trust Co Philadelphia 48.488,373 

Central Trust Co. of Illinois Chicago 47,315,526 

Rhode Island Hospital Trust Co Providence 47,197,861 

Security Trust and Savings Bank Los Angeles 46'638'si 9 

Title' Guarantee and Trust Co New York 45*635.154 

New York Life Insurance and Trust Co.. New York 39,279,698 

St; Louis Union Trust Co st Louis 39'232'894 

Mercantile Trust Co St! Louis 37,'302,'l49 

Savings Union Bank and Trust Co San Francisco 37,230.17.1 

Cleveland Trust Co Cleveland 35,878,084 

Northern Trust Co Chicago 35,129,067 

Fidelity Trust Co Newark. N. J. 30,127,527 

Metropolitan Trust Co. of the City of 

New York New York 29,124,007 

Brooklyn Trust Co New York 29,038,589 

Pennsylvania Co. for Insurance on Lives 

and Granting Annuities Philadelphia 27.910.485 

Empire Trust Co : New York 27,404,10'3 

Continental and Commercial Trust and 

Savings Bank Chicago 27,185.596 

Guardian Savings and Trust Co Cleveland 26,967,779 

Harris Trust and Savings Bank Chicago 26,773,'<z3 

Mississippi Valley Trust Co St. Louis 25,010,268 

Recapitulation. 

We have seen that the trust company Hrst came into existence in the 
United States in 1822, with a single company, which had no competitors 



*As used in the table, the North Atlantic States comprise Maine, New Hamp- 
shire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jer- 
sey and Pennsylvania; the South Atlantic States, Delaware, Maryland, District 
of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, 
and Florida; the North Central States, Ohio. Indiana, Illinois, Michigan. Wis- 
consin, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska and 
Kansas; the South Central States, Kentucky, Tennessee, Alabama, Mississippi, 
Louisiana, Texas. Oklahoma and Arkansas; the Western States, Montana, 
Wyoming. Colorado. New Mexico, Arizona, Utah. Nevada, Idaho, Washington, 
Oregon, California and Hawaii. 



HISTORY OF TRUST COMPANY MOVEMENT. 31 

for eight years, and only three after fourteen years. These early com- 
panies combined the trust business with the insurance business. It was 
many years later before the formation of trust companies as institutions 
apart from insurance companies began. After the Civil War a number 
of companies were organized, and the total number in 1875 was not far 
from fifty. During the later eighties a very distinct movement for the 
formation of trust companies began, which was lessened in degree dur- 
ing the early nineties, began again with phenomenal energy about 1897, 
and has continued in an increasing degree since that year. 

During its career the trust company has undergone a radical evolu- 
tion in the character of its business. To its original functions of trustee, 
agent, guardian, etc., have been added not only more extensive trust 
functions, such as executor, administrator, fiscal agent, etc., but other 
duties not contemplated by its originators. Most prominent among these 
lias been the business of banking, which trust companies in many States 
now undertake to the same extent as do the State banks and Savings 
banks. The growth of corporate undertakings has brought to the trust 
company many added duties as representatives of such corporations in 
various capacities. Since the Civil War many companies have added 
safe-deposit departments. In some States other lines of work have been 
added, including fidelity and title insurance. 

The conspicuous thing about the development of the trust company is 
that it has been able, largely through lack of legislative restrictions and 
because of the general breadth of its powers, to adapt itself to the par- 
ticular needs of the time and community. When a new field has opened, 
it has been ready and able to step into that field. 

Causes of the Growth of Trust Companies. 

Regarding the causes of growth of trust companies, the easiest thing 
to say is also probably the truest — that they are found in the tendencies 
of our age and nation. The trust company marks not a revolution, but 
an evolution in our methods of handling financial matters, and we can- 
not understand its development without taking into account the great 
changes which our civilization is undergoing. There is, to begin with, 
the accumulation of individual wealth — the increase in the number of 
persons and families having large interests to care for. This is not 
peculiar to the United States, but the general conditions which the hold- 
er of wealth has to meet here are quite different from those of the older 
countries of Europe, and make it of advantage to find other means than 
those used in Europe for the care and investment of great estates. A still 
more important influence has been the tremendous increase in corporate 
wealth, both in number of corporations and in the amounts under their 
control. Here are phenomena that are peculiar to the United States, 
and peculiar to this age. Nothing like the huge corporations formed in 
recent years in the United States has ever been known before since his- 
tory began. To care for these, institutions some special agency was need- 



32 TRUST COMPANIES. 

ed. The trust company proved equal to the emergency. Says one writer: 
"Without their (the trust companies') agency some of the transactions in 
modern corporate business would be both cumbersome and difficult. For 
the success of schemes of reorganization of railroad interests and the 
financing of vast industrial consolidations, their intervention has grown 
to be at least an invaluable convenience, if not altogether a necessity." 60 
Coincident with this tendency to great consolidations* — whether as 
result or as cause will not be discussed here — is the growing recognition 
among all classes of people of the value of associated effort. Here again 
the trust company finds itself in harmony with the times. It is an inter- 
mediary between great enterprises and the group of individuals who 
constitute its customers. It takes the amounts, large or small, con- 
tributed by the latter, in trust; and the result is a large amount which it 
can invest in any corporate undertaking to the mutual advantage of all 
concerned. The political economist will not fail to see here an important 
service to the community. Surplus funds, useless in small amounts, are 
gathered together and made to do service in enterprises that benefit the 
whole people. At the same time, the profits go to those who furnish the 
capital. The trust company is emphatically an institution of the people. 
As one writer has pointed out, it enables us to reap most of the ad- 
vantages claimed for community of ownership, without the dangers that 
would come with the systems proposed by dogmatists. 61 

Advantages of the Trust Company Form of Organization. 

Turning to the specific causes of growth of trust companies as com- 
pared with other financial institutions, various writers have pointed out 
the advantages which the trust company has over its competitors. 62 As 
compared with National banks, and with some State banks, it usually es- 
capes with less taxation. It attracts deposits by paying interest on them. 
A third cause, and in the writer's opinion by far the most important one 
in most communities, lies in the wide range of powers which the trust 
company may exercise. In most States it may do all of the things that 
an ordinarjr bank may do, except issue notes; and it performs numerous 
duties that other banks may not undertake. These wide powers attract 
customers. It is a distinct convenience to most people to have all of their 
financial business attended to under one roof. The trust company will 
not only care for their banking business, but will also receive their valu- 
ables for safe-keeping, care for their property, manage their estates tem- 
porarily or permanently, make investments for them, give financial and 
legal advice, aid in the preparation of wills and execute the same after 
the decease of the customer. 



60 Bankers Magazine, Vol. L»X, p. 272. 

61 Article on "The Trust Company," by Charles W. Stevenson, in "The Bank- 
ers' Monthly," Sept., 1903, p. 191. Articles by the same writer in "The Bankers' 
Monthly" for July, August and October, 1903, treat this phase of the subject at 
some length. 

62 See Bankers Magazine, Vol. XLIII., p. 722, and Vol. LVIIL, P. 505. 



CHAPTER II. 

THE FUNCTIONS OF TRUST COMPANIES. 

THE trust company of today performs a great variety of functions, 
some of which are peculiar to itself, while many are undertaken by 
other financial institutions. The most distinctive function of the 
trust company is undoubtedly that of acting as trustee for various pur- 
poses. Historically, this was the first kind of business, aside from insur- 
ance, that trust companies were authorized to undertake, and the legisla- 
tion of those States that have laws on the subject indicates that the law- 
makers had in mind such business as affording the essential reason for the 
chartering of these companies. With hardly an exception, the granting of 
other powers seems to have been intended by the framers of the laws as 
merely incidental to or helpful in the carrying out of duties as trustee. 

The same intention is evident in the name "trust company" — i. e., a 
company organized to accept and execute trusts. Webster defines a trust 
as "something committed to a person's care for use or management, and 
for which an account must be rendered." Blackstone defines it as mean- 
ing, in law, "an estate devised or granted in confidence that the devisee or 
grantee shall convey it, or dispose of the profits, at the will of or for the 
benefit of another; an estate held for the use of another." A trustee is a 
person or corporation to whom a trust is committed. With this in mind, 
it is not difficult to understand the theory of the trust company — simply 
a corporation empowered to undertake those special trusts of a business 
nature that men are apt to commit to others. This is the original and 
essential mission of the trust company. 

Experience has demonstrated, however, that for the proper execution 
of such trusts the company is under the necessity of carrying on other 
lines of business which increase its usefulness as a trustee. Thus one 
function after another has been added, until today the trust company 
undertakes a great number and variety of duties which justify the de- 
scriptive name that has been applied to it of "the department store of 
finance." 

Because of this diversity of functions, trust companies usually carry 
on their work in departments, the most common division being a three- 
fold one — into banking, trust and safe-deposit departments. Often the 
banking department is subdivided into the savings and the commercial 
banking departments, and the trust department into two parts, of which 
one is devoted to trust business for corporations, and the other to trust 
business for individuals. The largest companies frequently have other de- 
partments than these, sometimes because the volume of business makes a 
further division advantageous, and sometimes because other lines of busi- 
ness are included. Among the other departments sometimes found are 

33 



34 TRUST COMPANIES. 

the bond (or investment) department; the mortgage department; the 
transfer (or registration) department; the real-estate department; the re- 
organization department; the title-insurance and the fidelity insurance 
departments. Most companies make some special provisions for women, 
and some have a special woman's department. 

If the word trustee be taken in its widest meaning, the greater part 
of the functions of the trust company might be included in a description 
of its duties as trustee. There are certain forms of trustee work, how- 
ever, which occur so frequently that they have come to be referred to by 
special names, and it will be convenient to consider the various functions 
in the following groups: 

Business as trustee or agent for individuals, under private agreement. 

Probate business. 

Investment business. 

Real estate business. 

Insolvency business. 

Business as trustee or agent for corporations. 

Business as transfer agent and registrar for corporations. 

Corporation reorganization and financing. 

Fidelity insurance and title insurance. 

Safe-deposit business. 

Savings and banking business. 

Miscellaneous. 

• 

Nature and Variety of Individual Trusts. 

The number and variety of trusts undertaken for individuals under 
private agreement are very great, and new forms of such trusts are 
being constantly created. They come from many different classes of 
people— from active business men who have some special matters that 
they do not care to handle for themselves ; from teachers, artists, doctors, 
clergymen, women and others who feel that their inexperience or lack of 
time makes it wise to shift financial affairs to other shoulders; from 
persons whose poor health requires that they live in other climates and 
leave their business cares behind; from absentee property owners; from 
the aged, either too feeble to attend to active business or willing to 
take a well-earned rest; from persons planning to spend some time in 
travel and who must have a responsible agent to look after their affairs 
while away; and from others who, either from choice or from necessity, 
wish to avoid the care of their property either temporarily or perma- 
nently. 

In such cases the trust company takes entire charge of the property, 
whether real or personal, or both, just as an individual acting in like 
capacity would do. It collects interest, coupons, dividends, annuities, 
pensions, and any other form of income, notes, accounts, bonds, mort- 
gages, land contracts, etc.; if part of the property be real estate, it 



FUNCTIONS OF TRUST COMPANIES. 35 

looks after repairs and improvements, sees that the property is kept 
rented, keeps up insurance, pays taxes, collects rents ; it acts as attorney 
in fact, executes contracts, leases, deeds, etc. It remits or accumulates 
the income, reinvests the principal, according to the terms of the con- 
tract. 

Married women place their separate estates in the hands of the com- 
pany, either giving it the sole management or retaining such degree of 
Control as they see fit. 

It often happens that men wish to provide for wife or children or 
other dependents a fund which shall be beyond the reach of their credit- 
ors and safe from any unforeseen calamities that might befall the 
donor's estate, so that the beneficiaries may be assured of an income in 
any event. For such purposes they convey sufficient property to the trust 
company as trustee, with a definite contract as to the disposition to be 
made of the principal and income of same. 

Similar trusts may be created in favor of benevolent or educational 
institutions or others to whom the donor wishes to give the income only 
of an endowment, , without placing the latter under the control of the 
beneficiary. The trust company receives such funds, invests or reinvests 
the same from time to time as it becomes necessary, and applies the in- 
come as directed in the deed of trust. 

Trusts may be created for the benefit of one making the trust, either 
subject to his revocation at any time, or beyond his control. The young 
or inexperienced sometimes inherit estates, and suddenly find themselves 
in situations needing experience and wisdom beyond that which they pos- 
sess. Occasionallv persons in active business life find themselves dis- 
qualified through accident, sickness or other cause from caring for their 
business, and turn it over to the trust company. 

Persons whose incomes are received at long intervals or at uncertain 
times may arrange with the trust company to have the income paid to 
them in equal monthly installments. If the security is ample, the com- 
pany will sometimes make temporary advances if necessary. 

Trust companies are sometimes called upon to act as agents for the 
payment of such regularly recurring items as premiums on insurance, 
taxes, etc. In some instances they have undertaken to care for burial lots 
and graves. 

Persons who are to be away for a considerable time appoint the com- 
pany custodian of valuable papers and securities. This function is of 
much greater importance than mere safe-keeping. While the owner is 
away, it may be of the greatest importance to get at the papers. Bonds 
may be called for redemption, the owner may wish to place the securi- 
ties as collateral for a loan, coupons may become due, and the owner need 
the money for them. 

Some trust companies do a considerable business in the handling of 
escrows. They act as temporary trustees of papers, money or other 
property placed in their hands by one party to be given to a second 



36 TRUST COMPANIES. 

party upon the performance of a contract, the payment of a certain 
sum in money or the fulfillment of some other provision determined by 
the parties to the agreement. 

Sometimes estates which have been improvidently managed are placed 
in the hands of trust companies in the hope that they may be freed from 
incumbrances and put upon an income-producing basis. In some notable 
cases the superior facilities of trust companies have enabled them to 
preserve and make valuable estates that would have been worthless in 
the hands of the owners. 

A new fie]d of business is now being taken up by the trust companies, 
in the form of trust agreements relating to life insurance. The policies 
are made payable, or assigned, to the trust company as trustee, and at 
the death of the assured the company collects the proceeds of the poli- 
cies, of which it has meantime been the custodian, and applies such pro- 
ceeds according to the trust agreement. Many insurance companies do 
not write policies allowing stated payments to beneficiaries, and this plan 
therefore furnishes the opportunity not otherwise open for the insured 
to have such disposition made of the proceeds of his insurance. 

Trust agreements are also made by which beneficiaries may be paid 
stated annuities out of the proceeds of life-insurance policies. This ar- 
rangement is specially valuable where a man is not able to carry an 
amount of insurance such that the income alone will support the family. 
The trust company can so invest the proceeds that a small portion of the 
principal may be used each year while the balance is kept profitably in- 
vested. The fund may thus be made to provide a sufficient income during 
the probable life of the widow or during the minority of the children. 
One of the leading companies of the central States advertises that by 
this plan it is possible to pay an annuity of $500 for forty years out of 
$10,000 insurance, of $1,000 for forty years out of $20,000 insurance, 
etc. 

It is customary in appointing the trust company trustee to have the 
fees of the company made a part of the contract, and it may thus be 
known in advance just how much the expense will be. 

While the trust company is a corporation, it has usually succeeded on 
account of its wide powers and the character of the men in control in 
maintaining a degree of personality which adds to its attractiveness to 
customers. The confidential nature of many of its duties brings it into 
close touch with those whose affairs it handles. 

It is customary for trust companies to keep all trust funds entirely 
separate from their general assets; and, indeed, this is required by law 
in many States. This means that in case of the failure of the company 
the funds belonging to a particular trust cannot be mingled with the 
general assets of the company nor levied upon in any way by the credit- 
ors of the company. In addition to this, the trust becomes, in case its 
funds are not intact, a creditor of the company, protected as are its other 
creditors by its general assets. Trust funds are thus doubly safeguarded. 



FUNCTIONS OF TRUST COMPANIES. 37 

Securities and other property held in trust stand in the name of the 
company as trustee (etc.) for So-and-so, and thus show on their face 
that they are not the property of the company. 

Probate Business. 

The statutes of many States give to trust companies the power to 
accept and execute duties entrusted to them by will or by appointment of 
court as administrator, etc. In such capacities the company has the same 
powers and duties that an individual would have if acting in the same 
capacity. The manifest advantages which the trust company has over 
an individual for the performance of such trusts are steadily drawing to 
it a large portion of this business ; and it is safe to prophesy that it will 
ultimately become the usual practice to entrust the execution of wills 
and the administration of the estates of the dead to trust companies 
rather than to individuals. 

Business of this kind includes services as executor, administrator, 
trustee, guardian, committee, conservator. 

An executor is a person appointed by the testator in his will to take 
charge of his estate and dispose of it as directed in the will. 

An administrator is an officer appointed by the court having such 
jurisdiction in the several States to take charge of the estate of one who 
dies without leaving a will, and to dispose of the same in accordance with 
the inheritance laws of the State. 

An administrator-with-the-will-annexed is appointed by the court to 
take charge of the estate of a deceased person when no executor has been 
named in the will, or when the executor named refuses to act or dies. 

Acting in any one of these capacities, the trust company assumes en- 
tire charge of the estate, subject to the supervision of the court, and after 
a period varying in the several States, but usually eighteen or twenty- 
four months, makes a final distribution, according to the terms of the 
will or the laws of inheritance, as the case may be, and files with the 
proper public official an itemized statement of all receipts and ex- 
penditures under the trust. In winding up the affairs of an estate, the 
executor or administrator frequently finds it necessary to turn a portion 
of it over to a trustee appointed to manage it for the beneficiaries or to 
a guardian appointed to look after the estates (and in some States the 
persons) of heirs who are minors, or to a committee or conservator ap- 
pointed to have charge of an estate for heirs who are insane, idiots, 
habitual drunkards, spendthrifts or incapable for any reason of looking 
after their own affairs. In any of these capacities the trust companies 
may act, and it often happens that a given company acting as executor 
turns over a part of the estate to itself as trustee, guardian, etc., thus 
gaining for the estate the advantage of continuous management by the 
same trustee. It may also receive such trusts from other executors or 
administrators, whether individuals or trust companies. 



38 TRUST COMPANIES. 

In any of these capacities the trust company may, and often does, 
act in conjunction with individuals appointed to share the responsibility 
with it. 

In probate business of all kinds the company is accountable to the 
court for the faithful performance of its duties, and must render com- 
plete statements, which become part of the public records. The fees 
charged do not exceed those of individuals acting in similar capacities, 
and often are much less. The laws of the several States specify the fees 
allowed to executors, administrators, etc. 

It is common practice for a trust company to tender the services of 
its officers for the drawing of wills, and to act as custodian of wills until 
the death of the testator, when it files the will with the proper court; 
all these services being performed without charge in cases where the 
company is appointed executor. 

Testamentary trusts may be created for any lawful purpose. In act- 
ing as trustee under appointment by will, the duties of trust companies 
do not differ materially from their duties when acting in the same 
capacity under appointment by private agreement, In any probate 
capacity it may be necessary to make advances of money in order to 
save the estate, and this the trust company will do if the circumstances 
justify it. 

Trust companies are generally legal depositaries for others acting 
as executors, administrators, guardians, etc., and for court funds. 

The officer making such deposits with a trust company is, in most 
States, relieved from any responsibility in case of the loss of the funds 
through the failure of the trust company. He usually cannot escape this 
responsibility in case the funds are in his own keeping or deposited with 
an ordinary bank. 

By the appointment of a trust company as agent or trustee during 
one's life, and its selection as executor and trustee under will, the trustee 
work of a family may be kept in the same hands from generation to 
generation. 

Investment Business. 

In the performance of its other trust work of various kinds, the 
trust company is often called upon to invest or reinvest trust funds in 
securities that are safe and that yield as great returns as are consistent 
with safety. In addition to such demands, and to its needs for the in- 
vestment of its own funds, many companies find so great a field for 
dealings in high-grade securities as to justify the establishment of a bond 
or investment department to handle such business. The operations of 
this department, aside from its use for the customers of the other de- 
partments, do not as a rule differ greatly from those of a first-class bond 
house that deals exclusively in high-grade securities. 

The business of this department touches that of the trust department 
at many points. Trust funds must be invested as soon as possible after 



FUNCTIONS OF TRUST COMPANIES. 39 

being received. Reinvestments must be made from time to time, for 
mortgages become due and are paid, bonds mature or are called in for 
redemption, and the funds thus set free must not be allowed to remain as 
mere deposits too long, although interest at regular savings rates is al- 
lowed on such funds during the interim. The large trust company has 
excellent facilities for this service. The amount of securities that it 
must purchase for various interests is so great that it can buy on the 
best terms, and its opportunities for accurate and immediate knowledge 
of the securities market are of the best. Often one of its trust estates 
needs to dispose of securities at the same time that another needs to buy. 
A large mortgage is often divided among several estates. 

Special forms of investment are provided by some companies, the 
most common form being in the way of bonds secured by real estate 
mortgages. The company loans on mortgages, sometimes exclusively on 
property located in its own city, sometimes on property in several care- 
fully-selected cities. The amount loaned varies from forty to sixty per 
cent, of the appraised value of the property. The protection of title 
insurance and fire insurance policies is added. The company then issues 
a series of bonds secured by these mortgages, deposits the latter in trust 
with some other company, and replaces each mortgage as it matures or is 
paid by another mortgage for like amount, keeping the total of live 
mortgages always equal to or greater than the total of the series of 
bonds. The bonds usually bear four per cent, interest. 

Instead of issuing bonds, some companies simply sell the mortgages, 
giving the purchaser the benefit of the company's experience and judg- 
ment in the selection of the mortgages, but assuming no responsibility 
for the payment of same. Such companies sometimes have allied insti- 
tutions which will guarantee the payment of the mortgages for a small 
fee. 

Some companies handle investments for customers under investment 
deposit agreements. The aggregate of the deposits received for such 
purpose is invested in securities selected by the company's trust com- 
mittee, and these are held in trust for the depositors, each owning an 
interest in same determined by the ratio that his deposit bears to the 
total sum so invested. The income is collected by the company, and the 
net amount after deducting its fees is remitted pro rata to the depositors 
at stated intervals. 

Customers may purchase securities outright, as they would of any 
dealer. Or they may appoint the company agent for the investment of 
moneys, and for the care of securities and the collection of income on 
same. Savings depositors whose savings have accumulated to a sufficient 
amount frequently take advantage of the opportunity thus afforded to 
increase the earnings on their money. 

Investments may stand in the name of the company as trustee, thus 
securing a privacy to their investments which 'many, customers considei 
an advantage. 



40 TRUST COMPANIES. 



Real-Estate Business. 



Reference has already been made to the services that trust companies 
render in the care of real estate committed to their charge by private 
agreement or by will or by appointment of court. The equipment which 
the company has to maintain in order to do such work satisfactorily 
often places it in an advantageous position for undertaking a general 
real-estate agency business. It engages in the purchase and sale and 
renting of real estate, improved or unimproved, on commission. Like the 
other departments of its work, this business is frequently of great use 
to its trust department. Many trust estates have rentable property for 
which the company must find tenants. Sometimes trust agreements pro- 
vide that a portion of the funds of the trust must be invested in real 
estate. 

The company is often of assistance to prospective buyers who wish to 
borrow money in order to complete a purchase of real estate. Its ex- 
perience and reliability cause it to be called upon to act as appraiser of 
real property. 

Insolvency Business. 

Under the head of insolvency business are included the duties of 
assignee, trustee in bankruptcy and receiver. Trust companies are, in 
many States, authorized to act in these capacities. 

The enactment of the last National Bankruptcy Law in 1898 largely 
suspended the operation of the State insolvency laws, with the result that 
assignments have become less frequent than formerly. The duties of an 
assignee and of a trustee in bankruptcy are similar, and consist in se- 
curing a just distribution of the assets of an insolvent person, firm or 
corporation among the creditors. For this purpose the trust company 
assuming such duties takes charge of the property of whatever kind, if 
necessary converts it into cash, pays preferred claims, and distributes the 
remainder pro rata among the creditors, acting all the time under the 
direction and authority of the court having jurisdiction in the case. 

The duties of a receiver may be of quite a different character. A 
receiver is a person or corporation appointed by a court of equity to 
take charge of property in dispute. Such appointment does not neces- 
sarily imply insolvency. It may be made necessary on account of dissa- 
tisfaction on the part of stockholders with the management of the com- 
pany, on account of any dispute which the partners of a firm or the 
stockholders of a corporation cannot settle between them, on account of 
a serious tangle or temporary embarrassment in the affairs of the con- 
cern, as well as on account of actual insolvency. It frequently happens 
that the affairs of concerns become temporarily embarrassed, or that 
there is such friction between the managers that it becomes necessary to 
have a receiver to adjust matters. For such duties, as well as for those 
of assignee or trustee, the trust company is specially fitted, and this 



FUNCTIONS OF TRUST COMPANIES. 41 

class of work has been the field of some of the most successful operations 
of these companies. The duties require experience, good credit and large 
financial responsibility. Acting under the authority of the court the re- 
ceiver is often required for the time being to carry on a mercantile, 
manufacturing or transportation business. The receivership may be can- 
celled if the enterprise is put upon a satisfactory basis, and the prop- 
erty be handed over again to its owners. Or it may be neccessary to ef- 
fect a sale of the property, settle the debts, and pay the balance to the 
owners. Sometimes, when the circumstances warrant, large advances of 
money are made, thereby tiding the concern over its difficulties and re- 
establishing it as a profitable enterprise, or saving the assets for credit- 
ors or stockholders. Often the circumstances make advisable a read- 
justment of corporate indebtedness, and the trust company is peculiarly 
adapted to the work of formulating plans, recalling outstanding stocks 
or bonds and issuing new securities. 






Sundry Business as Trustee or Agent for Corporations. 



It is not too much to say that the affairs of the great corporations 
of the present day, as well as those of the smaller ones under existing 
conditions, could be carried on only with the greatest difficulty, if at all, 
without the aid of some such financial concerns as the trust companies. 

Probably the most common function of this kind is that of acting as 
trustee under a trust deed or mortgage securing an issue of bonds. 63 In 
signing the trustee's certificate on the bonds, the company certifies to the 
regularity of the issue, and to the genuineness of the document When 
necessary it sees to the refiling of the instrument, although the mortgage 
often specifically relieves the trustee of this responsibility. It does not 
guarantee the value or the payment of the bond, although the public 
often seems to think that it does. As a matter of fact, while the form of 
certification varies somewhat, it never covers more than the regularity 
of the issue and the genuineness of the document. Most trust companies 
do, however, make it a point not to authenticate bonds without having 
reason to believe, that the undertaking represented is presumably safe. 
Unquestionably the best companies do, and ought to, exercise the great- 
est care in this matter. 

In its capacity of trustee under a trust deed, the trust company is 
charged with the duty of acting as agent and protector of the bond- 
holders. In case of default of the company issuing the bonds, it usually 
has the duty of foreclosing on the property in the interests of the hold- 
ers of tfie securities, and of exercising numerous incidental duties con- 
nected therewith. 

It is often charged with the custody and management of a sinking 
fund, either in connection with its duties as trustee under a trust deed, 
or as a separate undertaking. 



63 See Chapter XV. 
4 



42 TRUST COMPANIES. 

It acts as fiscal or financial agent for corporations of all kinds — 
States, municipalities, railroads, industrial concerns. It pays bonds, 
coupons, interest. It may take entire charge of the disbursement of 
dividends and interest, attending to the publication and mailing of 
notices, etc. 

For syndicate managers, voting trusts, etc., it issues and collects calls 
for installment payments, and computes and distributes to the proper 
parties the amounts of their participations in the profits or proceeds. 

It acts as depositary of cash and securities, under varying conditions. 
Underwriting syndicates appoint it depositary and trustee. 

It is made agent to receive subscriptions to stocks and bonds, and to 
deliver the same when issued. 

It may receive and execute for corporations any of the trusts that 
have already been mentioned as undertaken for individuals under pri- 
vate agreement. 

Business as Transfer Agent and Registrar.* 

Trust companies are very generally used as transfer agent for stocks, 
and as registrar for stocks and bonds. In the older financial com- 
munities the value of such services has come to be so generally recog- 
nized that securities not registered by a responsible agent are looked 
upon with suspicion. The historical reason usually given for the adop- 
tion of the custom of having a registrar not connected with the concern 
issuing the stock, was the discovery some years ago in New York that a 
prominent railroad president had fraudulently overissued the stock of his 
companj r many hundreds of shares. The employment of a responsible 
registrar makes such a fraud impossible, for the essential function of the 
registrar is to see that not more than the authorized amount of stock is 
issued. 

The transfer agent assumes the entire work of transferring the stock 
of a corporation — a duty requiring thorough knowledge of the laws gov- 
erning such matters, and great care and accuracy in the performance of 
the details. The cancellation of a single certificate of stock and the issu- 
ance of a new certificate often involve the change in ownership of 
thousands of dollars' worth of property; yet it may be done by a few 
strokes of the pen. 

It is often desirable to register bonds, either as to principal or as to 
interest, or both. Usually the trust company that acts as trustee under 
the bond issue also acts as registrar of the bonds. In some communities 
the same company is often appointed both transfer agent and registrar 
of the same stock. This is illogical, since the function of the registrar 
is to operate as a check upon any error or irregularity on the part of the 
transfer agent. 



See Chapter XV. 



* 



FUNCTIONS OF TRUST COMPANIES. 43 

Corporation Reorganization and Financing. 



Some trust companies handle a large amount of business in the reor- 
ganization or financing of corporate enterprises of different kinds. This 
field is one concerning which a wide difference of opinion exists among 
managers of trust companies as well as among the general public. There 
are companies which devote themselves to this business very largely, 
while others abstain from it absolutely, believing it not a proper field 
for companies which handle funds in trust. 

In the consideration of the problem much depends upon the char- 
acter of the financing that is to be undertaken. No well-informed person 
will deny that there is a field for services in this line whose legitimacy 
is beyond question, and whose performance involves little risk. It is like- 
wise evident that there is a class of operations so risky that no corpora- 
tion which handles the funds of others ought to undertake them. The 
temptation to step from one class of operations into the other is some- 
times great; and this fact doubtless accounts for the prejudice that exists 
in some quarters against trust companies undertaking corporation finan- 
cing of any kind. 

When it becomes necessary for any reason to reorganize a corpora- 
tion having outstanding securities, the trust company offers exceptional 
facilities for the work. The plan of reorganization must first be deter- 
mined. If new securities are to be issued the old ones must be called in 
and temporary receipts given. When the new securities are ready they 
must be distributed among the receipt-holders in the proper propor- 
tions — the determination of which may require careful computation. At 
the same time an assessment may have to be collected, or a cash or stock 
dividend be distributed. Fractional shares or bonds may need to be pur- 
chased or sold. 

When a new corporate enterprise is proposed in any community 
some one in whom the public has confidence must investigate and report, 
or else each prospective investor must make investigation for himself. 
Some one must see that the new corporation actually owns the property 
which it claims to have; that its title is good; that the securities which it 
offers to the public are correctly prepared, and that they give the pur- 
chaser a real lien upon the property; in short, that the whole proposition 
is legitimate and made in good faith. The services here outlined appear 
to be perfectly legitimate, and to involve no risk to the trust company 
undertaking them other than the risk assumed in accepting any re- 
sponsible trust. 

These services, however, constitute only the preliminary steps in the 
financing of enterprises. The securities are ready for sale; they must 
now be sold. It is at this point that the most serious differences of 
opinion arise regarding the attitude of the trust company. In placing the 
securities upon the market, the trust company may act, if it acts at all, 
as a mere agent for the sale and delivery of same; or it may set the 



44 TRUST COMPANIES. 

stamp of its approval upon them to the extent of recommending them for 
purchase to its group of customers, or to the extent of purchasing same, 
in its capacity of trustee, for some of its trust accounts; or it may pur- 
chase a portion of the issue for its own account. Here the trust com- 
pany is clearly treading upon ground which may or may not be danger- 
ous, according to circumstances, but which in any event requires the 
highest degree of honor and integrity and business judgment of the 
finest type. 

Fidelity Insurance and Title Insurance. 

Some of the States empower trust companies to undertake the busi- 
ness of fidelity insurance and of title insurance, but comparatively few 
trust companies undertake these duties. As a rule, where they do un- 
dertake them, they make such work a specialty, and confine themselves 
mainly to the specialty. The larger part of fidelity insurance business 
is done by independent bond or surety companies. 

Fidelity insurance consists chiefly in becoming surety for or guar- 
anteeing the honesty and fidelity of employees, officers and other persons 
holding positions of trust and responsibility. Bonds for this purpose 
were formerly signed by friends of the person holding such position, 
but the practice is rapidly growing of having such bonds executed by 
companies who make it their business. Beyond any question the new 
plan is better than the old, whether from the standpoint of the person 
bonded, the one signing the bond, or the security afforded the beneficiary 
named in the bond. The person who is required to give bond feels, or 
ought to feel, a delicacy about asking his friends to go on his bond. If 
he does ask a friend to do so, that friend must, if he complies with the 
request, assume for himself and his heirs a responsibility whose degree 
is not determinable, which may last for a number of years, and which 
may involve himself and family in ruin. To the beneficiary under the 
bond, the individual is not satisfactory as a surety, because, among other 
reasons, his financial ability is not always determinable with accuracy, 
and it may be ample to-day and nothing to-morrow. On the other hand, 
the company which makes a business of fidelity insurance receives com- 
pensation of a reasonable annual premium for its services, assumes the 
risk as a business proposition on the same general principles as the life 
or fire insurance company, and protects the beneficiary by a capital and 
financial responsibility that are known. Fidelity insurance companies 
are also often called upon to sign bonds guaranteeing the financial re- 
sponsibility of individuals, partnerships and corporations. 

A title insurance* policy is "an agreement under which the company 
agrees to defend, at its own expense, all litigation directed against the 
title insured by it, and if attacked successfully, it will pay the parties 
guaranteed the amount of the loss up to the full sum insured for." In 
short, it is an ordinary certificate of title, with insurance of the title 
added. This is a comparatively new business, the oldest companies hav- 



* See Chapter XI. 



nE 



FUNCTIONS OF TRUST COMPANIES. 45 

ing existed only about twenty years, but it is one which is growing rapid- 
ly. For its successful performance, a special and elaborate equipment is 
necessary. 

Safe-Deposit Business.* 

As already noted, trust companies very generally conduct safe- 
deposit departments. For this purpose the best companies have specially- 
constructed vaults in the preparation of which the greatest care is used to 
insure that they shall be absolutely proof against fire, burglars, mobs 
and water. In addition guards are on duty twenty-four hours a day, and 
there are usually automatic alarms to give notice of any trouble. For 
the keeping of money and valuable papers individual boxes within the 
main vault are rented, access to which may be had only by the renter or 
his authorized deputy in company with the vault attendant. For the 
storage of larger articles of value, vaults are provided in which space is 
rented by the cubic foot or yard. Many companies maintain delivery 
wagons, and call for or deliver valuables entrusted to their care. Coupon 
rooms are provided, where each customer may cut his coupons or examine 
his papers in absolute privacy. The large companies also provide other 
conveniences, such as toilet-rooms, reading-rooms, parlors, committee- 
rooms, etc. 

This department is a valuable, if not a necessary, part of the equip- 
ment of a good trust company. An increasing number of depositors feel 
the need of such accommodations, and much prefer to have them under 
the same roof as their bank or trust company. While the expense of 
equipping the best vaults is great, it is not all chargeable to the safe- 
deposit department, since trust companies need large and impregnable 
vaults for the safe keeping of the securities and other valuables en- 
trusted to them in the other departments of their business. 

Superiority of Trust Companies over Individuals Acting in Trust 

Capacities. 

The advantages which the trust company has over individuals for the 
performance of the various trust duties outlined in the preceding pages 
are many. The following are among the most conspicuous of these 
advantages : 

The life of the trust company is perpetual — it will live long enough 
to execute the trusts that are committed to it. On the other hand, an in- 
dividual to whom a trust is committed may die on the very day that he 
undertakes the trust. To install another individual trustee will then in- 
volve delay and additional expense — perhaps serious loss. And when it 
is done, there is no guarantee that he will not die, making another 
change necessarj^. Even if the individual lives, he may for various 
reasons resign the trust, or may become incapacitated through sickness 
or other cause. 



* See Chapter VII. 



l(i TRUST COMPANIES. 

The trust company has an established office and can always be found 
when needed. The individual is sometimes difficult to locate. 

The trust company is always at its place of business every business 
day of the year. It does not take vacations, does not go away on business 
trips, does not get sick. 

The trust company is organized especially for carrying on such 
work, which is therefore not secondary to its own business, but is a part 
of its business. If an individual is competent to carry on such work it is 
because he has had a successful training in looking after his own af- 
fairs, and his success is usually due to the fact that he has given his 
business his undivided attention. If he undertakes the trust it must be 
as a thing secondary to his own business, or else he must neglect the 
latter. Finding that he has not the necessary time to look after details, 
he may turn them over to an incompetent employee. 

Being organized for the work, the trust company has all the necessary 
equipment — officers and clerks trained for the service, conversant with 
laws and forms and methods of procedure, vaults for the safe keeping of 
valuables, correct forms for the keeping of accounts, books to keep track 
of due-dates of securities and times for the payment of taxes, insurance, 
premiums, etc. It does not forget. 

It is the trust company's business to understand the work. It does 
not make mistakes due to ignorance, and would be responsible if it did. 
It has the benefit of a large experience in the work it is undertaking. 
Very often individual trustees or executors, however honest and faithful, 
make mistakes that are costly or entirely disastrous. 

For the making of investments in the name of the trust, the trust 
company has advantages which few if any individuals have. The matter 
is determined by a committee of men trained in such work, and with 
every facility at their command for keeping in touch with conditions 
and knowing something of intrinsic values. The extent of the company's 
operations also enables it to buy on better terms than the individual can. 

The trust company gives to the trust, without extra cost in ordinary 
matters, the benefit of the best legal advice. It unites the advantages of 
the advice of a number of experienced counselors with the promptness in 
action of a competent individual. 

The trust company is, in most States, subject to examination by State 
authorities. Its books are always open to inspection by the proper 
persons. They are intelligible and kept up to date. The individual trus- 
tee under private appointment is not usually subject to examination; 
and when he is, his books are often in a tangle. 

The superior facilities of trust companies often enable them to ad- 
minister trusts with far greater economy than is possible to the in- 
dividual trustee. Expenses are often much less, while the company is 
usually in position to secure a greater income for the trust than could 
the individual. The latter must give a bond, the cost of which must be 
borne by the estate: while the trust company's assets and special deposit 
with the State protect the trust without extra cost. 



\ 



FUNCTIONS OF TRUST COMPANIES. 47 

Frequently the interests of the estate — perhaps its very preservation 
— depend upon temporary advances of money. The trust company is in 
position to make such advances; few individuals are. 

Individuals are often subject to personal prejudices, sympathies or 
influences which lead them into unwise uses of the property. The trust 
company is not subject to these things. 

The most important consideration of all is that of safety — the abso- 
lute safet} 1 - of the property. Here the advantages offered by the trust 
company as compared with the individual are unquestioned. Besides the 
State supervision just referred to, the trust company protects its cus- 
tomers by a large capital and surplus, and in most States by a deposit 
made with the State officials to guarantee the faithful performance of 
its trust duties. These things amply insure against loss due to possible 
dishonesty on the part of the company's officers or employees. The com- 
pany as an institution cannot possibly be dishonest or unfaithful. It has 
nothing to gain and everything to lose by such a course. It is to con- 
tinue in business for a long term of years or perpetually. Its success de- 
pends upon its reputation for integrity and faithfulness. At a recent 
meeting of the Trust Company Section of the American Bankers' Asso- 
ciation, it was stated that there had never been a trust fund impaired by 
a failure of a trust company having control of the fund. Instances of 
loss to depositors in the banking department there have been, though 
not many; but the trust funds are so safeguarded that the loss to them is 
well-nigh impossible. There may be loss to the ordinary creditor of a 
trust company without in the slightest degree impairing its trust funds, 
which are kept separate and are not a part of its assets. 

On the other hand, losses through individual trustees, executors and 
administrators have been numerous. How often have the papers told of 
instances where individuals serving in such capacities have proved un- 
faithful or fatally incompetent! Men of reputation for unquestioned 
integrity have been led through speculation or embarrassment in their 
own affairs to borrow the funds entrusted to them with the full intention 
of repaying the loan in a few weeks or months, only to find that such 
restitution is impossible, that they are defaulters, and that the widow and 
orphan are left penniless through their unfaithfulness. Others, wil- 
fully dishonest, have squandered the funds entrusted to them until every 
cent was gone and the beneficiaries of the trust were left in dire need. 
Bonds furnished by these men have often proved worthless; and where 
ultimately found good, great expense of litigation has been incurred, 
and the property has been tied up pending settlement of suits. 

Business of Banks and Trust Companies Compared. 

Trust companies carry on the banking business, and in the great 
majority of cases this business constitutes the largest part of their 
duties. The banking department is usually divided into the department 



48 TRUST COMPANIES. 

of commercial accounts, in which the business is similar to that of the 
National bank with the exception of note issue, and with the exception 
in many States of discounting paper; and the savings department, in 
which the business is identical with that of the savings department of 
the incorporated Savings banks of the central States, and not materially 
diiFerent from that of the mutual Savings banks of the East. 

In view of the statement just made, the question naturally arises, 
"What is the difference between the trust company and the bank?" This 
question has been discussed to some extent in the periodicals and in the 
circulars of trust companies. In these discussions are represented diam- 
etrically opposite views; namely, that there is no difference between the 
two institutions, and that there is a wide difference. The variety of 
opinion arises from the fact that different writers tell of the particular 
trust companies with which they are familiar, and which differ from 
each other; and also — and more generally — from the fact that some dis- 
cuss the question from the theoretical side, while others, disregarding 
the theory., speak of the actual practice as they find it. 

So far as concerns business other than that of the banking depart- 
ment, the foregoing discussion of the functions of trust companies re- 
veals an important difference between these companies and banks. While 
it is true that some of these functions have been and still are carried on 
to some extent by some banks, the tendency is to leave this field wholly 
to trust companies, while many of these functions may not legally be 
undertaken by banks. Allowing for exceptions, it may be said without 
fear of contradiction that the functions thus far described are distinctively 
those of trust companies. 

As a matter of theory there are important differences between the 
business of the banking department of trust companies and that of State 
and National banks. In theory and in early practice the banking depart- 
ment of the trust company was merely incidental to its other functions, 
being maintained to care for the funds coming to it in trust. The trust 
company is a depositary for the inactive and accumulating funds of the 
community, the bank for the active funds — the funds used in business. 
It follows that the natural depositor of the bank is the business man, or 
firm or company, whose funds are continually in use, quickly turned 
over, and who expects in return, not interest, but accommodation in the 
way of discounts. The natural depositor of the trust company, on the 
other hand, is the person or concern whose funds are not in active use, 
and who wishes a place for the safe-keeping and accumulation of same. 
A prominent writer on trust company subjects 64 has classified trust de- 
positors, as distinguished from bank depositors, as follows: 



64 Breckinridge Jones, President of the Mississippi Valley Trust Co., St. 
Louis. His paper on "The Trust Company Question," delivered before the Mis- 
souri Bankers' convention in 1892, and published in pamphlet form by his com- 
pany, is a masterpiece, and has been widely copied. So far as the writer knows, 
it was the first published study of the question. The writer acknowledges his 
indebtedness to this paper for many of the points here given. 



FUNCTIONS OF TRUST COMPANIES. 49 

"1. The laborer, mechanic, clerk, teacher — all those who work for 
wages or on salary. 

2. The capitalist, the professional man, the married woman who has 
a separate estate. 

3. The business man who wishes to separate his private income or 
the surplus profits of his business from his general business capital. 

4. The corporation, public or private, that is accumulating a sinking 
fund, or any individual who is husbanding a balance to pay a debt. 

5. The executor, administrator, curator, guardian, assignee, receiver, 
trustee under deed or will or order of court. 

In short, all such who wish their daily deposits to draw interest." 

A study of this list reveals a class of accounts entirely distinct from 
those handled by the ordinary bank, and a class of accounts, too, for 
which little provision is made by National banks or by the old-time 
State banks. 

These trust depositors expect from the trust company in return for 
their accounts compensation of quite a different kind from that which 
the bank depositors expect from their bank. Their moneys are placed in 
the care of the company for accumulation; they want interest on their 
funds as well as a safe place to keep them. The ability to withdraw the 
funds on demand is not of pressing importance to them, and they are 
often willing to give notice some time in advance of intention to with- 
draw their deposits. 

It results that the trust company is in position to invest its funds in 
ways quite different from the bank. The funds of the latter must be so 
placed that they can be quickly recovered to meet the needs of cus- 
tomers, being usually invested in paper that will mature in thirty, sixty 
or ninety days, or four months at the longest. The trust company can 
safely make long time loans on collateral or on real estate. Moreover, 
since the trust company pays in full for the use of its depositors' money 
by allowing interest on such money, it has no obligation to confine its 
loans to depositors, but may lend to whomsoever offers the best security 
and the highest rate; or it may invest its money largely in bonds and 
stocks. The bank remunerates its depositors by offering them a line of 
discounts, and hence must reserve its money mainly for loans to such 
depositors. 

The necessity of dividing its loanable funds equitably among its de- 
positors who desire discounts requires the bank to confine its loans to 
comparatively small amounts, while the trust company is in position to 
make large loans. 

As a matter of theory, then, both as regards the classes of customers 
whom they serve and as regards the uses of their funds, trust companies 
and banks occupy distinct fields. They are co-ordinate institutions, each 
supplementing the work of the other, and both necessary factors in car- 
rying on the financial affairs of the community. There is here not com- 
petition, but co-operation. 



50 TRUST COMPANIES. 

So much for the theory. In actual practice, the differences between 
the two classes of institutions are much less marked, and the tendency in 
manj^ communities is steadily to lessen such differences as do exist. As 
a matter of fact the trust company of to-day has invaded a portion ot 
the field of the bank, while, on the other hand, the bank is invading a 
portion of the field of the trust company. Most trust companies seek 
business accounts, payable on demand by check, offering as inducement 
interest on satisfactory daily balances. In cases where the law does not 
forbid, some companies also offer lines of discount. On the part of the 
banks there is a noticeable tendency in many localities to seek inactive 
accounts on which interest is allowed. This movement is being taken up 
by National banks, which in some instances maintain savings depart- 
ments. 

The result is that there are communities in which there are only 
slight differences between the business done by State banks and that 
done by the banking departments of trust companies. Both maintain com- 
mercial banking and savings departments conducted in the same ways. 
Their loans and investments are of practically the same character. 

In other communities, where most of the banks and trust companies 
follow the lines of business for which each was theoretically established, 
there may sometimes be found individual trust companies which do a 
regular banking business, and individual banks which compete for the 
dormant accounts that naturally belong to trust companies or Savings 
banks. 

Taking it the country over, it is safe to say that the difference be- 
tween the average State bank and the banking department of the average 
trust company is slight, except in those States where trust companies 
may not discount commercial paper. 65 Such differences as exist usually 
concern the proportions of the various kinds of business handled, busi- 
ness accounts as a rule forming the larger, and inactive accounts the 
smaller part of the bank's business, while the reverse is true of the 
banking department of the trust company. 

Where the trust company is forbidden to discount commercial paper, 
there results, of course, a distinct difference in the business of the two 
institutions due to such prohibition. In such cases the trust company 
still handles a large number of business accounts, as many business men 
either do not need discounts, or have other means of procuring them. In 
uiany places the practice has grown of forming working agreements by 
which groups of banks and trust companies throw business into each 
others' hands. By this means a given group of financiers is able to 
handle financial business of anjr kind. This plan is a recognition at 
once of the need of both institutions and of essential differences in their 
functions. 



65 This statement is based on a personal study of trust companies in eight 
of the largest cities, and upon an examination of the business advertised in the 
circulars of some three hundred representative trust companies located in all 
parts of the country. 



FUNCTIONS OF TRUST COMPANIES. 51 

• 
There is considerable difference between the State laws governing 
trust companies and those governing State banks. As a rule, the former 
are much less hampered by restrictions in the character of their business. 
In a later chapter the laws of the different States will be discussed in 
detail. 

It is evident that there is a close resemblance between the business of 
the savings department of the trust company and that of the Savings 
bank, especially of the incorporated Savings bank, which is the usual 
form of such institutions outside of the Eastern and New England 
States. Both are after savings accounts. With regard to the mutual 
Savings banks, particularly, the theory is that such institutions exist 
especially for the accounts of those whose savings are comparatively 
small, while the trust companies are supposed to exist primarily for the 
safe keeping and accumulation of larger accounts. In practice, however, 
this distinction is not always maintained, although it is probably true 
that the average savings account of the trust company is larger than that 
of the mutual Savings bank. But trust companies usually advertise that 
deposits of more than five or ten thousand dollars will not be received at 
the regular interest rates. The minimum deposit received by either in- 
stitution is usually one dollar. 

In this connection it is worth while to call attention to the important 
service that the trust company, as well as the Savings bank, is rendering 
in the way of adding to the available money supply of the country. 
Through the medium of a large number of small accounts they gather 
from the people of their neighborhoods large sums that would other- 
wise be kept in the traditional stocking or in private safes. These funds 
are thus placed at the disposal of the community for use in carrying on 
its business, and make possible enterprises that benefit the whole people, 
and that would otherwise fail for lack of available funds. Particularly 
is this the case with reference to those companies in outlying parts of 
large cities, or in other localities where banks would not find enough 
business to keep them alive. As an instance of this, the writer knows of 
a trust company located outside the business district of a large city 
which in ten years accumulated deposits of over two millions, the larger 
part of which came from persons who had not theretofore deposited in 
banks at all. Here was a large sum put into active circulation and so 
made productive, to the mutual benefit of the depositors, the bank and 
the community at large. 

Miscellaneous Functions. 

Occasionally trust companies perform functions not mentioned in the 
foregoing discussion. For instance, some companies, in the far Western 
States particularly, write fire insurance as agents. The wide powers 
granted by the laws of most States permit trust companies to undertake 
almost, any kind of financial business, and the result is that companies 



52 TRUST COMPANIES. 

in different localities take up special lines of business for which there 
happens to be a field. 

It is usual for trust companies to offer to customers the services of 
their officers for legal and financial advice on ordinary matters that in- 
volve no complicated questions. This does not mean, of course, that the 
company undertakes to do the lawyer's work in such cases. But many 
of its customers are wholly ignorant of the most common principles and 
practices in business and commercial law, and as a result are greatly 
profited by advice in what seems to the experienced a very simple mat- 
ter. Much litigation and loss, and many foolish "investments" are pre- 
vented by a little advice to such persons. The banker sometimes per- 
forms similar services for his customer, but the usual bank customer is 
acquainted with business procedure, while a considerable number of trust 
company customers are not so acquainted. 

Complaints are heard in some quarters that the trust company is en- 
croaching upon the field of the lawyer. Undoubtedly this is true as 
regards the handling of estates and the performance of many duties of a 
fiduciary nature. On the other hand, the trust company gives employ- 
ment to a large number of lawyers. Every company has its attorney or 
force of attorneys, and trust officers are usually chosen from the ranks 
of those who have had legal training. Trust companies make it a prac- 
tice, when a lawyer brings them a trust, to retain him as attorney for 
that trust whenever special services are needed. Furthermore, the trust 
company is a great aid to the lawyer in many ways. He often needs 
to select for his clients a trustee, guardian, receiver, assignee, depositary, 
etc. He is often called upon to make investments for his clients — a re- 
sponsibility that many lawyers do not care to assume. In the practice 
of corporation law the lawyer finds the trust company of special use to 
him. Its facilities for the accurate keeping of accounts, preparing re- 
ports, caring for securities and managing estates appeal to many lawyers 
who have not the time or the inclination to assume other than the purely 
legal part of the work. To a great extent the trust company supplements 
and assists the lawyer of large practice. 

Sources of Earning Power. 

It is evident that the sources of earning power of the trust company 
are much more numerous than those of the bank. It may do all that the 
bank may do, and many things besides. One writer 66 has pointed out 
the fact that the trust company has developed all the earning power of 
an individual, thus adding greatly to its profits, as well as to its useful- 
ness. To get at the possible earning power of the trust company, 
therefore, one must remember that it is not confined to the profits from 
the interest on funds under its care in the form of capital and deposits, 



66 Guy Morrison Walker: pamphlet on "Trust Companies." 



FUNCTIONS OF TRUST COMPANIES. 53 

but adds fees for its services in trust capacities of ordinary kinds and 
special fees for special services. The tremendous earnings of some 
trust companies have been due more to the skill of their officers in per- 
forming services of a more or less personal nature than to the natural 
earnings of their banking departments or the regular fees on trust work. 
It is also true that during the flush times preceding the year 1903, 
large sums were made by many companies through underwritings and 
stock investments. These means of profit were, to say the least, hazard- 
ous, and in many cases the profits of this kind of preceding years have 
been reduced or turned into losses since 1903. The depreciation of 
values beginning in 19Q3 brought about a healthful reaction in the policy 
of some companies. 

The Trust Company Still in the Formative Period. 

One thing that must strike the careful observer forcibly is that the 
trust company as an institution is still in the formative period. As has 
been already pointed out, it travels ahead of statute law, such laws 
usually being formulated to govern a business already established, rather 
than outlining a business to be put in operation, as was the case with the 
National Bank Act. As a consequence it is too early to determine the 
exact form into which experience will cause the trust company business 
to crystallize. 

That there is and ought to be a growing demand for more careful 
regulation and examination of trust companies in many States is evident, 
and the interests of both the public and the trust companies themselves 
will be subserved by a wise response to such demand. On the other hand, 
it would be a misfortune if unnecessary restrictions were imposed, which 
would result in preventing the trust companies from developing in har- 
mony with the changing conditions of our American life. In this power 
of adjustment to existing conditions lies the secret of the great success 
of these institutions, not only in making earnings for themselves, but as 
well in serving the general public. Those bankers who, feeling the com- 
petition of trust companies, wish to have the laws of various States 
amended so as to put the banks in better relative position, should bear 
this fact in mind. If changes are to be made in the laws, wisdom 
dictates that such changes be in the line of removing any needless re- 
strictions on the work of the banks, if such exist, rather than imposing 
any needless restrictions on the work of trust companies. 67 

The fact is that, allowing for some exceptions, the methods of trust 
companies are, on the whole, sound business methods, attended with as 
much safety to the public and to the companies as those of the banks. 
Besides this they have the great advantage of being better adapted to 
present needs, and of being able to adapt themselves to new needs when 
they present themselves. 



67 See Guy Morrison Walker: pamphlet on "Trust Companies," pp. 14-16. 



CHAPTER III. 

THE ORGANIZATION OF TRUST COMPANIES. 

THE question as to whether there is a sufficient field for the organiza- 
tion of a new trust company in any given community is one which 
should be given careful study before steps are taken for such 
organization. During the flush times preceding the depression of 1903 
and the panic of 1907 some trust companies were undoubtedly organized 
for which there was not a sufficient field. Many of them have passed 
out of existence, involving losses to their stockholders. On the other 
hand, trust companies have been started in places where the conservatives 
could see no possible chance for success, and have become prosperous and 
useful institutions. 

Whether the trust company form of organization is to be preferred to 
others must, of course, depend upon the circumstances of the time and 
place. The present tendency, however, is undoubtedly towards prefer- 
ring the trust company form except where the conditions clearly call for 
a National bank; and many State banks and incorporated Savings banks, 
as well as some National banks, are being changed to trust companies. Be- 
cause of their wide powers and of the privileges which they enjoy, these 
institutions often thrive where ordinary banks could not make a living. 

Elements Contributing to Success. 

The success of a new institution will depend very largely upon the 
men behind it. A poorly "backed" company will have difficulty in mak- 
ing a success even in a good field, while companies with the proper back- 
ing and officers have often prospered in fields that seemed fully occupied. 
If a new company is projected, therefore, the question of prime impor- 
tance at the start is, Who will be its stockholders, its directors, its officers ? 
First of all, they should be men whose standing in the community is 
unquestioned — men of probity and character. Men who have money and 
nothing more may help the bank at the start, and may bring it much busi- 
ness, but they cannot help in building up business among the general 
public, whose confidence must be obtained before the new institution can 
meet with pronounced success. While this is conspicuously an age of 
money and money power, there are, fortunately, some things which mere 
money can not do, and one of them is to secure the confidence of the 
public. 

There is no substitute for character as a means of leading the people 
to put trust in a financial institution. 

The shareholders should be men whose interests lie in the community 
where the company is to be located, thereby insuring their continued sup- 
port of the enterprise after it is launched. An institution with good 

54 



ORGANIZATION OF TRUST COMPANIES. 55 

prospects is almost always able to pick its stockholders, and should avoid 
admitting those who wish to subscribe merely as a speculation. Sub- 
scribers are often required to pledge a certain amount of business to the 
new company for a given period, and to state what business they think 
they can bring from others. If the concern is to do a general business, 
not confining itself to a specialty, the stockholders should be so selected 
as to represent as many different lines of business and professions as 
possible. Some difference of opinion exists as to whether it is better 
to have a large number of stockholders with few shares held by each, 
or to limit the number and increase the holdings. The former plan 
usually insures a larger group of customers from the start, and gives the 
general public more interest in the project. The latter plan permits of 
more unanimous and concerted action, and is sometimes of convenience. 
As a rule, however, the former plan is preferable. 

Steps Preliminary to the Organization. 

When it has been decided that a company shall be organized, a meet- 
ing should be called to discuss preliminary plans and to prepare papers 
in application for a charter. Blank forms for this purpose are usually 
supplied by the State banking department, where such a department ex- 
ists, or by the Secretary of State. In any case the forms should be pre- 
pared by a competent attorney, and his services should be utilized during 
all the proceedings until the company has begun business. The minutes 
of the meetings should either be kept by him, or else be subject to his 
examination and approval. At this first meeting a committee should be 
appointed to receive subscriptions to the stock and to apportion the stock 
carefully among the bidders. 

From this point on the plan of procedure will depend upon the laws 
of the State in which the company is to be incorporated. Three plans of 
incorporation are in vogue. In some States trust companies are incor- 
porated only by special act of the Legislature, following the usual ante- 
bellum method of chartering State banks. In other States special laws 
for the incorporation of trust companies have been passed. In the re- 
maining States these companies must be organized under the general 
laws for the incorporation of banks or of corporations for profit. 

As an example of the procedure in those States having special laws 
for the incorporation of trust companies, that prescribed by the laws of 
the State of New York may be taken. 

Incorporation of Trust Companies in New York. 

Since 1887 most companies in the State have been incorporated under 
the general trust company law of that year, though some have been in- 
corporated under the old plan of a special act of the Legislature. Under 
the general law, as amended in 1914, seven or more persons may form 
such a corporation. They must first publish a notice of intention to or- 



56 TRUST COMPANIES. 

ganize a trust company, at least once a week for four weeks, in a news- 
paper to be designated by the Superintendent of Banks, in the city or 
town where such trust company is proposed to be located; and a copy of 
such notice must be sent at least fifteen days before the filing of the 
organization certificate, to each State bank and trust company organized 
and doing business in the city, borough or town where such company is 
proposed to be located. The State banking department furnishes a form 
for this notice, which reads as follows : 

NOTICE OF INTENTION TO ORGANIZE. 

We, the undersigned, hereby give notice of our intention to organize a trust 

company, under and pursuant to the laws of the State of New York, and in 

conformity with the statute in such case made and provided, we hereby specify 
and state as follows, to wit: 

First, The names of the proposed corporators are: 



Second, The name of the proposed trust company is . 

Third, The location of the proposed trust company is to be . 

Fourth, The amount of its capital stock is Dollars. 

In witness whereof we have hereunto affixed our signatures this day 

of , 191—. 

(Here must be placed the signatures of the corporators.) 

The corporators, having complied with these requirements, must fur- 
nish proof of their having done so to the Superintendent of Banks. For 
the notices in the newspaper, ordinary proof of publication should be 
furnished. The department furnishes a form for the proof of service on 
the existing trust companies, as follows : 

PROOF OF SERVICE OF NOTICE OF INTENTION TO ORGANIZE. 

State of New York, ~) 
County of L 

ss.: 



, being duly sworn, deposes and says that he is upwards of twenty-one 

years of age, and resides at No. , in the of ; that on the 

day of — , 191 — , he served a copy of the annexed notice of 

intention to organize — — — upon each State Bank and Trust Company here- 
inafter named by mailing to each of such State Banks and Trust Companies a 

true copy of said notice at the postoffice in the of inclosed in a 

sealed envelope and directed to each of such State banks and Trust Companies 
at their postoffice addresses, and prepaying the proper postage on each of said 
notices so mailed, as follows, to wit: 



Sworn to before me this 

day of , 191- 



After the lapse of at least twenty-eight days from the date of the 
first due publication of the notice of intention to organize and within 
ten days after the date of the last publication thereof, the organization 



ORGiVNIZATION OF TRUST COMPANIES. 57 

certificate, executed in duplicate, must be submitted to the Superintend- 
ent of Banks, together with the proofs of publication and service of 
notice of intention to organize. A form of organization certificate is 
provided, as follows: 

ORGANIZATION CERTIFICATE OF 
The Trust Company 



We, the undersigned, all being of full age of us being citizens of 

the United States and — of us being residents of the State of New York, 

having associated ourselves together for the purpose of forming a Trust Company 
under and pursuant to the Banking Law of the State of New York, do hereby 
certify: 

First. That the name by which such Trust Company is to be known is . 

Second. That the place where its business is to be transacted is — . 

Third. That the amount of its capital stock is to be thousand 

dollars, and the number of shares into which such capital stock is to be divided 
is • . 

Fourth. That the names and places of residence of the incorporators are 
as follows: 

Full names. Residences. 



Fifth. That the term of its existence shall be 



Sixth. That said incorporators each for himself does hereby declare that 
he will accept the responsibilities and faithfully discharge the duties of a director 
if elected to act as such when authorized by the provisions of the Banking Law 
of the State of New York. 

Ik Witness Whereof, We have made, signed and acknowledged this certifi- 
cate in duplicate, this day of , 191 — . 



State of New York, ~) 

County of > 

ss .: J 

On this day of — — , 191 — , personally appeared before me 



to me known to be the persons described in and who executed the foregoing 
certificate, and severally acknowledged that they executed the same. 



(Attach County Clerk's certificate authenticating signature of Notary Public 
who takes acknowledgments.) 

After receipt of the organization certificate, if it complies with the 
requirements of law in all particulars, the Superintendent of Banks must 
endorse on it "Filed for examination," with date. The Superintendent 
is then charged with the duty of ascertaining whether the character, re- 
sponsibility and general fitness of the persons named in such certificate 
are such as to command confidence and warrant belief that the business 
of the proposed corporation will be honestly and efficiently conducted in 
accordance with the intent and purpose of the law, and whether the 
public convenience and advantage will be promoted by allowing such 
proposed corporation to engage in business. Within sixty days after the 
filing of such certificate for examination, he must endorse upon each of 



58 TRUST COMPANIES. 

the duplicates of the certificate the word "approved" or the word "re- 
fused." with the date, and his official signature. In case of refusal he 
returns one of the duplicates to the proposed incorporators. In case of 
approval, he notifies the proposed incorporators^ files one of the dupli- 
cate certificates in his own office and the other in the office of the county 
clerk. 

At this point the corporate existence of the trust company begins, 
and it has power to elect officers and transact such other business as re- 
lates to its organization. It may not transact any other business, how- 
ever, until its capital stock has been fulty paid and an affidavit of said 
payment has been filed with the Superintendent, until it has filed with 
the Superintendent a verified list of its stockholders, with name, resi- 
dence, post-office address and number of shares held by each stockhold- 
er, until it has made the required deposit with the Superintendent, and 
until it has received from him the authorization certificate. The various 
steps of the organization are outlined by the Banking Department as 
follows : 

PROCEDURE FOR THE ORGANIZATION OF A TRUST COMPANY. 

Chapter 2 of the Consolidated Laws. 

* ***** 

1. Execution by incorporators of notice of intention to organize and organ- 
ization certificate in duplicate. Sections 180-181. 

2. Filing of notice of intention to organize with Superintendent with request 
for designation of newspaper in which to publish same. In order to assist the 
Superintendent in making the investigation hereafter required and to expedite 
same, it is advisable to submit at the same time a statement with reference to 
the need for such an institution and two references (banking references pre- 
ferred) for each incorporator. Sections 20 and 23. 

3. Designation of newspaper in which to publish notice of intention to 
organize. Section 20. 

4. Publication of notice of intention. Section 181. 

5. Service of notice of intention. Section 181. 

6. Submission of organization certificate in duplicate to Superintendent of 
Banks accompanied by proof of publication and of service of notice of inten- 
tion. Section 182. 

7. Filing of duplicate organization certificates for examination. Section 22.. 

8. Investigation bv the Superintendent of Banks and approval or refusal. 
Section 23. 

9. Filing of duplicate organization certificates. Section 23. 

10. Payment of capital. Section 183. 

11. Organization as corporation. Section 183. 

12. Examination by Superintendent as to payment of capital and report.. 
Section 24. 

13. Filing of affidavit of payment of capital in County Clerk's office and 
certified copy in office of Superintendent of Banks. Section 183. 

14. Payment of organization tax and filing of duplicate receipts with Super- 
intendent of Banks and County Clerk. Section 180 of Tax Law. 

15. Filing of verified list of stockholders in the office of the Superin- 
tendent. Section 183. 

16. Deposit of bonds with Superintendent. Sections 183 and 184. 

17. Filing oaths of directors with Superintendent. Section 211. 

18. Authorization certificate to be issued by the Superintendent and filed 
and recorded in the office of the Superintendent and of the County Clerk.. 
Section 24. 



ORGANIZATION OF TRUST COMPANIES. 59 

While these legal proceedings are being attended to, presumably by 
the attorney of the corporators, a large number of details must be looked 
after by the man or men who are to be in active control of the company. 
Stock certificates must be ready to give to the stockholders when the 
subscriptions are fully paid. The seal of the company must be secured. 
The quarters for the company must be made ready, and the various 
books, records and blanks must be prepared. Arrangements must be 
made with the correspondents of the banking department. 

After organization, the first duty of the directors is the adoption of 
a set of by-laws and the election of officers. Before the actual election of 
officers, there is usually an understanding as to who the men in active 
control are to be. It saves much time and trouble if the by-laws are pre- 
pared in advance by some competent person. After organization, the 
directors will of course make such changes in such by-laws as they see 
fit before adopting them, but they can work to much better purpose with 
an outline already drawn. 

By-Laws. 

The exact form of by-laws will of course vary greatly with different 
companies, many details depending upon the size of the company, the 
probable character of its business, etc. Herewith are submitted the by- 
laws used by a company in New York, having total assets of about 
fourteen millions. They serve as a fair sample of the by-laws of a pro- 
gressive, up-to-date company, but of course contain provisions peculiar to 
the company, and are perhaps longer and more detailed than 
usual. The article on officers and employees, in particular, is apt 
to be quite different in smaller companies. Often the Secretary and 
Treasurer is the head executive officer, the President being merely an 
honorary office. Sometimes one of the Vice-Presidents is the active head. 

BY-LAWS OF THE FRANKLIN TRUST COMPANY, OF THE CITY OF 
NEW YORK, BOROUGH OF BROOKLYN. 

Amended to and Adopted February 4, 1903; Amended, December 9, 1903. 

ARTICLE I. 

Stockholders. 

Section 1. A regular annual meeting of the stockholders of the company 
shall be held at its office at 10 o'clock a. m. on the second Wednesday of January 
in each year, or, if that be a legal holiday, then on the next business day, for 
the election of trustees in the class whose term of office shall then next expire; 
and for the transaction of such other business as may properly be brought be- 
fore the meeting. Such election shall be between the hours of 10 a. m. and 11 
a. m., and shall be advertised and conducted as provided for by law. 

Section 2. Special meetings of the stockholders shall be called and held in 
the cases provided by statute, and may be called and held whenever and as often 
as the President, a majority of the board of trustees, or of the executive com- 
mittee, may deem expedient; and it shall be the duty of the President to call 
such meetings upon the written request of the owners of record of a majority 
of the capital stock of the company. 

Section 3. In addition to such other notice, if any, as may be required 



60 TRUST COMPANIES. 

from time to time by law, ten days' written or printed notice of the regular 
annual meeting and also of every special meeting of the stockholders shall be 
served personally upon each stockholder of record, or mailed to such stockholder 
at his post office address as shown on the stock ledger, or published at least 
twice not more than twenty or less than ten days before the meeting, in some 
newspaper published in the Borough of Brooklyn, City of New York, and such 
notice of special meetings shall state the objects of the meeting. 

Section 4- The holders of record of not less than one-fourth of all the 
capital stock of the company issued and outstanding, represented in person or 
by proxy executed pursuant to the requirements of the General Corporation Law, 
shall constitute a quorum for the transaction of business at any meeting of the 
stockholders except in the cases where otherwise provided by the General Cor- 
poration Law; but if there be less than a quorum represented at any meeting, 
the holders of a majority of the stock so represented present in person or by 
proxy may adjourn the meeting to some future date. 

Section 5. At any and all meetings of the stockholders, every registered 
owner of shares may vote in pprson or by proxy executed pursuant to the re- 
quirements of the General Corporation Law, one vote for each share owned by 
him and standing in his name, but no proxy shall be valid after the expiration 
of eleven months from the date of its execution, unless the member executing 
it shall have specified therein the length of time it is to continue in force, which 
shall be for some limited period. 

At all elections of trustees the voting shall be by ballot, and a plurality 
of the votes cast thereat shall elect. 

Section 6. The stockholders at each annual meeting shall also elect, or 
appoint, three persons, who shall not be trustees or officers of the company, and 
who need not be stockholders, to act as inspectors of election at all the follow- 
ing meetings of the stockholders until the close of the next annual meeting. If 
an inspector shall decline to serve, or neglect to attend any meeting, or his office 
shall become vacant, the President may appoint an inspector in his place. The 
inspectors of election shall take charge of the polls, and, after balloting, shall 
sign and acknowledge a certificate of the result of the vote taken, and shall 
return, file and verify statements and certificates in the special cases as pro- 
vided in the General Corporation Law. Each inspector before entering upon 
the performance of his duties shall be sworn to faithfully execute the duties of 
inspector at such meeting with strict impartiality and according to the best 
of his ability. 

ARTICLE II. 
Board of Trustees. 

Section 1. The business and affairs of the company shall be directed by a 
board of twenty trustees, who shall be elected by ballot in accordance with law 
at the annual meeting of the stockholders, six at the meeting of January, 1900, 
and every third year thereafter; and seven at the meeting of January, 1901, and 
every third year thereafter, and seven at the meeting of January, 1902, and every 
third year thereafter; the term of office of each class to commence on the next 
succeeding Wednesday at 9 a. m., and continue three years, or until their suc- 
cessors are elected and qualified. 

Each trustee must be a holder of record in his own name and right of at 
least twenty-five shares of the capital stock of the company, and when he ceases 
to hold or own said number of shares he shall thereupon cease to be a trustee. 

Section 2. Whenever a vacancy shall occur in the board, by death, resigna- 
tion, or otherwise, in the interval between the annual meetings of the stock- 
holders, it shall be filled by the board for the remainder of the term, by election 
by ballot at a regular meeting, after nomination at a previous monthly meeting; 
or, if no such nomination has been made, after nomination by the executive 
committee at any regular meeting of such committee, held at least one week 
previous to such meeting of the board of trustees at which the election is to 
be held, and notice by the secretary of the proposed election shall be sent with 
the notice of the meeting at which it is to be held. 



ORGANIZATION OF TRUST COMPANIES. 61 

Section 3. There shall be a regular meeting of the board of trustees on 
the first Wednesday after the first Monday of every month, except January, 
when it shall be held on the third Wednesday, at 9 a. m., or at such other day 
or time as the board may from time to time appoint, to which a report shall 
be made by the President of the business and affairs of the company. At all 
regular meetings of the board the following shall be the order of business, unless 
changed by a vote of a majority of the trustees present: 

1. Calling the roll. 

2. Reading the minutes of the last regular meeting and of any special 

meeting or meetings held since the last regular meeting. 

3. Reading the minutes of the meetings of the executive committee since 

the last meeting of the board. 

4. Report of the President. 

5. Report of the Secretary. 

6. Reports of committees. 

7. Unfinished business. 

8. New business. 

Section 4- At the regular meeting of the board of trustees on the third 
Wednesday of January in each year, after reading the report of the inspectors 
of election and calling the roll, the first business shall be the election of a Presi- 
dent, Vice-Presidents, and an Executive Committee; and whenever a vacancy shall 
occur in the office of President or either of the Vice-Presidents, or in the Ex- 
ecutive Committee, it shall be filled at a regular meeting of the board, or at a 
special meeting called for that purpose after notice in either case by the Secre- 
tary of the proposed election and the meeting at which it is to be held. Such 
elections shall be by ballot. 

Special meetings of the board of trustees may be called at any time by the 
President, and shall be called by him upon written request of three trustees. 

ARTICLE III. 

Executive Committee. 

Section 1. There shall be an executive committee consisting of the Presi- 
dent ex-officio and four trustees elected annually by the board of trustees, who 
shall organize by the election of their own chairman (who shall not be the 
President), and shall hold their offices until their successors are elected in 
their places. Vacancies in the committee shall be filled by the board of trustees. 

Section 2. The executive committee shall have and exercise in the intervals 
between the meetings of the trustees all the powers of the board which can 
lawfully be delegated, and shall have general supervision of and direct the affairs 
and practical operation of the company. It shall superintend and advise all 
investments of the funds of the company, and of trust funds in charge of the 
company for investment, and shall supervise all special trusts; and no guardian- 
ship, receivership, or special trust, other than by orders of a court having 
jurisdiction, shall be accepted by the company without the committee's approba- 
tion and concurrence, except that in the intervals between the meetings of the 
committee such trusts may be accepted by the President upon approval by the 
counsel, such action to be reported at the next meeting of the committee. 

The executive committee may, in its discretion, authorize the President 
to make such loans and investments as are permitted by law and report the 
same at its next following meeting, and its chairman shall, during the pleasure 
of the committee, have such power and perform such lawful acts as the com- 
mittee may deem necessary for the proper transaction of the current business 
of the company. 

Section 3. The executive committee shall designate from time to time the 
banks or financial institutions in which deposits of the moneys of the company 
shall be made. 

Section 4- The executive committee shall meet once every week, and at such 
other times as it may appoint, or may be called by the President or its chair- 



62 TRUST COMPANIES. 

man. A majority of the committee shall form a quorum for business, and reg- 
ular minutes of its proceedings shall be kept, which shall always be open to the 
inspection of any trustee, and shall be read at the following meeting of the 
board of trustees. 

Section 5. Subject to the approval of the board of trustees at its next 
following meeting, the executive committee may fix the compensation* and define 
the duties not otherwise enumerated of the officers, clerks and employees of the 
company, who shall give such bonds as the committee may require as further 
provided for in Article VII., Section 1. All agents or employees of the com- 
pany shall be subject to removal by the executive committee, with or without 
assignment of cause or reason for such action. 

ARTICLE IV. 

Examining Committee. 

Section 1. There shall be an examination made in December and June 
of each year, of the books, accounts, cash, and securities of the company, by 
a committee to be appointed each half year by the board of trustees for that 
purpose, who shall report to the board the results of such examination, and sign 
and verify the semi-annual statement to the Banking Department required by 
statute, and the committee last appointed may make such other examinations at 
such other times as it may deem necessary. 

Section 2. Trustees while serving on the executive committee shall be in- 
eligible for appointment on the examining committee. 

ARTICLE V. 

Other Committees. 

Section 1. The board of trustees may from time to time direct the creation 
of other committees, and may appoint from among their number, or otherwise, 
such other committees, standing or special, as may be deemed proper, and may 
direct and delegate to any such committee such powers and duties as may 
seem expedient, and revoke the same and terminate such duties at pleasure. 

ARTICLE VI. 

Counsel. 

Section 1. Counsel shall be appointed by the executive committee, at stated 
annual compensation, for general advice to the officers, executive committee or 
board of trustees in the performance of their duties. 

Section 2. In all cases of loans on bond and mortgage, excepting those 
where the title is guaranteed by a corporation approved by the board of trus- 
tees, an abstract of title, approved by the counsel of the company, shall be de- 
posited with the company. 

ARTICLE VII. 

Officers and Employees. 

Section 1. The officers of the company shall be a President, a Vice-President, 
a second Vice-President, a Secretary, two Assistant Secretaries and a Trust Offi- 
cer, all of whom, except the President, and Vice-Presidents, shall hold their 
respective offices during the pleasure of the board of trustees or of the executive 
committee. The President and the Vice-Presidents shall be trustees of the com- 
pany, and shall hold their offices respectively for one year from the third Wednes- 
day of January in each year, and until others are elected in their stead. Bonds 
satisfactory to the executive committee, and in amount not less than ten thousand 
dollars, shall be given by the Secretary, Assistant Secretaries and Trust Oflicer, 
and not less than five thousand dollars by each clerk. New or additional securi- 
ties may at any time be required by the executive committee. 



ORGANIZATION OF TRUST COMPANIES. 63 

Section 2. The election of officers shall take place on the third Wednesday 
of January in each year as provided for in Article II, Section 4, and vacancies 
shall be filled as therein provided for. The salaries or compensation of all 
officers and employees of the company shall be fixed by the executive committee, 
subject to the approval of the board of trustees as provided for in Article 
III., Section 5. 

Section 3. The executive committee, subject to the approval of the board 
of trustees, may from time to time appoint, or authorize the President to appoint, 
such agents and employees as it may deem best, and may prescribe the duties 
of the officers, agents and employees of the company. All agents and employees 
of the company shall be subject to removal as provided for in Article III., 
Section 5. 

Section If. The President shall be the chief executive of the company. He 
shall preside at all meetings of the stockholders and of the board of trustees, 
and he shall be a member ex-officio of all standing committees, except the 
examining committee. He shall have general charge, supervision and control 
of the business and affairs of the company, see to the proper and safe custody 
of the securities of the company and in its charge, subject, however, to the 
authority and control of the board of trustees and of the executive committee; 
and, subj ect to review of his action by said board and committee, he may appoint, 
suspend and discharge all agents and employees. He may call special meetings 
of the trustees whenever he may deem it proper, and shall call them whenever any 
three of the trustees shall request him in writing to do so, of which meetings 
at least one day's notice shall be given. 

Section 5. It shall be the duty of the President or a Vice-President to sign 
all certificates issued for deposits of money, and all checks drawn, except checks 
for dividends and coupons, which shall be signed by any two officers of the 
company; and to keep, or cause to be kept, a daily record of all moneys received 
and paid out by the company. He shall countersign or certify all bonds issued 
by the company as trustee. 

Whenever any stock shall be hypothecated with the company as security 
for a debt or loan, the President is authorized at his discretion to cause the 
transfer of same to the company. He shall also have power to make any and 
all transfers of the securities of the company, which may be authorized by the 
executive committee. 

He shall at all times exercise such general direction and supervision over 
the business of the company as its interests and security may require; and in 
all cases where the duties of the subordinate officers and agents of the company 
are not specially prescribed by the by-laws or resolutions of the board ef 
trustees or of the executive committee, they shall obey the orders and instructions 
of the President. 

Section 6. The President shall have the custody of the seal of the com- 
pany, and shall have the power to affix the same to certificates of the capital 
stock of the company; to certificates acknowledging satisfactions of judgments 
and mortgages and to assignments of mortgages; to releases of portions of 
mortgaged premises, to transfers and powers of attorney for the transfer of 
hypothecated stocks, and for the collection of interest and dividends; to legal 
proceedings; to any assignments of mortgages or stocks to the Superintendent 
of the Banking Department; also to all deeds and releases of any real estate, 
or portions thereof, which have been or may be conveyed to the company in or 
by any trust deed or mortgage, and to any contract in relation to any real 
estate or portions thereof, so conveyed, when such deed, release or contract is 
authorized or required by the provisions of said deed of trust of mortgage; to 
certificates of deposit; to receipts for money or property; to acceptances of ap- 
pointment, as executor, administrator, guardian, receiver or other special trust, 
ordered by a court having jurisdiction, and to such transfers of the securities 
of the company as may be authorized by the executive committee. The seal 
of the company shall not be affixed to any other deed, conveyance or instrument 
whatever, unless by authority of the board or executive committee. 

Section 7. In the case of the death, absence, or disability of the President, 
his powers shall be exercised and his duties discharged by the Vice-President, and 



64 TRUST COMPANIES. 

in like manner the second Vice-President shall have the powers and duties of 
the President, in the event of the absence or disability of the President and 
Vice-President; and in the event of the death, absence, or disability of the 
President, Vice-President and second Vice-President, the executive committee 
for the time being shall appoint one of their number to act as President until 
the board of trustees shall, by a majority vote of their number, appoint a trustee 
to act as President pro tempore. 

The said Vice-Presidents shall perform all such other duties as may be 
assigned to them from time to time by the board or the executive committee. 
One of the Vice-Presidents shall be a salaried officer of the company, and shall 
devote his entire time and attention to the business. He shall assist the Presi- 
dent ■' It directed from time to time. He shall, under direction of 
the President, be charged with the administration of the business and affairs 
of the company. He shall have such other duties as may be prescribed by the 
board of trustees, the executive committee, or the President. 

Section 8. The Secretary shall be the custodian of the records of the com- 
pany, unless otherwise provided by the by-laws, or directed by the board of 
trustees, or the executive committee. He shall keep the records of all votes 
and proceedings of the stockholders and of the board of trustees and of the 
executive committee in books kept for that purpose. He shall give due notice 
of all meetings of the stockholders and of the board of trustees and of the ex- 
ecutive committee. 

He shall supervise the receipts of all moneys, and the issuing of vouchers or 
certificates therefor, and shall keep a record daily of all such receipts and vouchers 
or certificates. He shall examine and countersign all checks for the payment of 
money, except checks for dividends and coupons, which shall be signed by any 
two officers of the company, and no money-voucher or certificate, except as be- 
fore provided, shall be issued from the office without his signature thereon. 

He shall supervise the deposits of all money lodged daily in bank, and com- 
pare the entry thereof with the book on its return from the bank, and also with 
the record of the receipts of the day. 

He shall have the custody, under the control and supervision of the President, 
or a Vice-President, of all securities lodged as collaterals for loans made by the 
company. 

Section 9. He shall also have the supervision of the stock and bond ledgers, 
and the proper filling out, completion and delivery of all certificates of stocks, 
taking the proper vouchers therefor — also the payments of all dividends. He 
shall perform such other duties as may be assigned to him by the Vice-Presi- 
dents, President, executive committee, or board of trustees. 

Section 10. The Assistant Secretaries shall assist the Secretary. 

In the absence or disability of the Secretary, an Assistant Secretary shall 
have the powers and perform the duties of the office. The Assistant Secretaries 
shall perform such other duties as may be assigned to them by the Vice-Presi- 
dents, President, executive committee, or board of trustees. In case of the 
absence or disability of the Secretary and both Assistant Secretaries, the Presi- 
dent shall designate such trustee, officer or employee of the company as he may 
deem proper to act as Secretary pro tempore, with the like powers and duties. 

Section 11. The Trust Officer shall give his special attention and supervision 
to the various trust accounts opened in the office, see that all entries of debits 
and credits are correctly made and properly registered, and all trust records 
properly made and kept. He shall have general charge of the transfers and 
registries of all stocks and bonds, the exchange of bonds, the payment of inter- 
est of all registered bonds and coupons paid at the office of the company. He 
shall countersign all trust checks issued, except coupon checks. He shall perform 
such other duties as may be assigned to him by the Vice-Presidents, President, 
executive committee, or board of trustees. In case of the absence or disability 
of the Trust Officer, the President shall designate such trustee, officer or em- 
ployee of the company as he may deem proper to act as Trust Officer pro tempore, 
with the like powers and duties. 



ORGANIZATION OF TRUST COMPANIES. 65 

ARTICLE VIII. 
Conduct of Business. 

Section 1. No loan on bond and mortgage shall be made without the ap- 
proval and concurrence of the President, and the executive committee, and in 
all cases of loans on bond and mortgage, except where the title is guaranteed 
by a corporation approved by the board of trustees, an abstract of title ap- 
proved by the counsel of the company shall be deposited with the company. 

All agreements or instruments of trust shall, when required by the Presi- 
dent, be examined and approved by the counsel of the company before the 
acceptance or execution thereof. 

Section 2. No loan shall be made to any member of the board of trustees 
or officer of the company. 

Section 3. All moneys of the company, or under its charge, deposited in 
financial institutions designated by the executive committee, shall be deposited 
therein to the credit of the company by its corporate name. 

Section 4. Every expense incurred or paid exceeding two hundred and 
fifty dollars shall be reported to the executive committee at its next meeting 
after the making of such obligation or disbursement. 

Section 5. Certificates of money received on deposit, specifying the dura- 
tion and terms of the deposit, shall be issued when required by the person making 
the deposit; but in such cases the money received, shall, when due, be payable 
only on the production of the original certificate, or its substitute if the original 
be lost or destroyed. 

All certificates of deposit previous to their being issued shall be registered 
in certificate books to be kept for that purpose, which books shall be prepared 
with sufficient stub-margins, in which each certificate shall be numbered, registered 
and described, and where all payments thereon shall be recorded; and all certifi- 
cates when paid in full shall be cancelled, defaced and filed away. 

Section 6. If any person shall apply for certificate of stock of the company, 
or a certificate of deposit, to be issued in lieu of one lost or destroyed, he 
shall make an affidavit of the facts and circumstances of the loss or destruction; 
he shall - advertise in one or more daily public newspapers to be designated by 
the President, for the period of six weeks, twice in each week, an account of 
the loss or destruction, describing the certificate and calling upon all persons 
to show cause why a new certificate should not be issued in lieu of that lost or 
destroyed; and he shall file with the company his affidavits and the advertisement 
above required, with proof of its due publication, and shall give to the company 
his bond of indemnity with one or more sureties satisfactory to the President, 
in double the amount of the certificate, against any damage that may arise 
from issuing a new certificate; whereupon the President may issue a new certifi- 
cate of the same number and tenor as that said to be lost or destroyed, and 
specifying that it is in lieu thereof. 

Section 7. No interest on any bond and mortgage to the company shall be 
allowed to remain overdue longer than thirty days without a foreclosure or suit 
being ordered by the President, unless a longer delay shall be directed by the 
executive committee. And it shall be the duty of the Secretary to notify the 
executive committee of any such default in payment of interest or principal of 
any loan on bond and mortgage. 

Any other loan not paid at its maturity shall be reported by the Secretary 
to the executive committee at its meeting next following such default. 

Section 8. Books of transfer shall be kept, in which all transfers of capital 
stock and of certificates of deposit, when assignable, shall be made and entered 
by the persons entitled to make such transfers, or by their attorneys; but no 
such transfer shall be permitted until the original certificate shall be surrendered 
and cancelled. 

Section 9. The President, or such other trustee as may be designated for 
the purpose by resolution of the board of trustees or of the executive committee, 
may become a director or trustee in any corporation of which this company 
is a stockholder or creditor, for the purpose of representing therein the inter- 
ests of this company. 



66 TRUST COMPANIES. 

ARTICLE IX. 

Capital Stock. 

Section 1. The interest or ownership of each shareholder of this company 
shall be evidenced by certificates of shares of the capital stock of the company. 
No certificate shall be valid unless signed by the President or one of the Vice- 
Presidents, and the Secretary or one of the Assistant Secretaries, and sealed 
with the company's seal. 

Section 2. All such certificates shall be issued in consecutive order from 
the certificate book, and shall be numbered and registered in the order in which 
they are issued, and on the stub of each certificate issued shall be entered the 
name of the person owning the shares represented by such certificate, with the 
number of shares and the date thereof, and in case of cancellation the date 
of cancellation. A receipt for each certificate issued shall be duly signed on or 
attached to the stub of the certificate book, and all certificates exchanged or 
surrendered shall be cancelled and pasted in their original places in the certifi- 
cate book, and no new certificate issued until the old certificate or certificates 
for the same number of shares shall have been surrendered and cancelled. 

Section 3. Shares in the capital stock of the company shall be transferred 
only on the books of the company by the holder in person upon surrender and 
cancellation of certificates for a like number of shares, or by his attorney with 
like surrender and cancellation of such certificates with duly executed power to 
transfer, endorsed thereon or attached thereto. 

Section 4- All certificates of stock issued by the company shall be counter- 
signed by such bank or other institution as shall be from time to time designated 
by the executive committee as registrar of transfers, and no certificate of stock 
shall be binding upon the company or have any validity until so countersigned. 

ARTICLE X. 

Dividends and Closing of Transfer Books. 

Section 1. The board of trustees may declare dividends from the net 
profits of the company whenever they shall deem it expedient. 

Section 2. The transfer books of the company shall be closed for such 
length of time as the board of trustees may from time to time determine as 
necessary before the payment of dividends, and before meetings of the stock- 
holders for elections. 

ARTICLE XI. 

Amendments to By-Laws. 

No new by-laws shall be adopted, nor shall any alteration be made in the 
by-laws, except upon notice stating the proposed amendment given at a previous 
regular meeting of the board of trustees, or upon recommendation of the execu- 
tive committee, and notice mailed to each trustee not less than five days in 
advance of any regular or special meeting of the board. 

The by-laws are drawn up by the directors of the company, who have 
power to determine their form, provided, of course, that they are not 
contrary to law. The laws of the State usually prescribe the amount of 
capital stock required, the minimum and sometimes the maximum number 
of directors, the qualifications and some of the duties of directors, and 
various limitations upon the making of loans and investments and the 
exercise of other powers. They also frequently prescribe rules as to 
such matters as the issue of pass-books, the payment of deposits to 
minors, etc. The persons who draw up the by-laws should, of course, 
be thoroughly familiar with the provisions of the State laws. 



ORGANIZATION OF TRUST COMPANIES. 67 

Care in the Selection of Directors. 

The choice of directors is a matter of supreme importance to the in- 
terests of the company. Unless they are men of known integrity and 
business capacity, the company will have difficulty in making a success. 
It has already been urged that the stockholders of the company should 
be men of good standing in the community, and the best men among 
these should be chosen as directors. Upon them will devolve the responsibil- 
ity for the general management of the company. They will choose the 
officers who will have charge of the active management of the company, 
but both the stockholders and the public expect, and have right to ex- 
pect, that the directors will see to it that these officers manage the com- 
pany in the best way. No man has a right to accept the election as a 
director of a trust company who is not willing to give enough of his time 
and attention to know that matters are being properly conducted. One 
cannot too strongly deprecate the practice followed by some, of accept- 
ing places on such boards without intention of giving any thought or time 
to the trust thus accepted. Suits at law have been instituted against 
such careless officials when their inattention has permitted losses to stock- 
holders and depositors alike, and the laws of some States hold them re- 
sponsible. 

Whatever the legal aspect of the case may be, one who accepts such 
a trust and then gives it no attention, is morally guilty of criminal care- 
lessness. He jeopardizes the property of others, and perhaps the very 
means of subsistence of widows and orphans. 

Having completed the adoption of by-laws, decided the membership 
of the first board of directors, and chosen officers, and carried out the 
legal requirements already described, the organization of the trust com- 
pany is complete. While these things are being attended to, it is 
presumed, as already stated, that the material equipment of the company 
is being made ready by those who are to be in charge of it. The offices 
of the company will be more or less elaborate in their arrangements, ac- 
cording to circumstances. It is not often that too much money is spent 
in making the quarters attractive and convenient, both to customers and 
to the workers. The general public is certain to judge an institution 
largely by appearances, and an attractive looking suite of rooms is very 
apt to add largely to the success of the company. Much difference in 
the customs in this matter is observable in different cities. In some it is 
the usual thing for banks and trust companies to be equipped in elab- 
orate fashion. In such cities a new institution must, of course, see to it 
that its quarters compare favorably with others. In some cities com- 
paratively little attention is given to making the offices attractive and 
convenient. A new institution starting in such a city will manifestly be 
the gainer by starting an improvement in this matter. 

Many . of the larger trust companies of to-day own their own build- 
ings, which are constructed specially for their use. The advisability of 



68 TRUST COMPANIES. 

this depends largely upon local conditions, but in most communities has 
much to commend it. A building is an asset that people can see, and 
tends to give a feeling of confidence. 

The vaults of the company should be strictly up-to-date, and large 
enough not for the present only, but for probable future needs. The 
mistake of having them too small is much more common than that of 
having them too large. A trust company will ordinarily have use for a 
larger vault or vaults than an ordinary bank, because of the securities 
of others that must be cared for in addition to its own securities and 
records. If only one vault is erected, that part used by the banking de- 
partment should be separated by a grill from the portion used by the 
trust department. If a safety deposit department is to be conducted, of 
course a special equipment is necessary. 

Organization of Trust Companies by Special Charter. 

As already stated, trust companies in some States are incorporated 
only by special charter granted by the Legislature. In these States, 
after it has been decided to apply for a charter, a committee of the per- 
sons interested is appointed to draw up, under legal advice, an act of in- 
corporation involving such provisions as are wanted (being sure to 
specify a wide range of powers), and to arrange for the introduction of 
the bill to the Legislature by some member thereof. If the Legislature 
sees fit to grant the charter, either as presented or amended by the 
Legislature, the company is usually authorized to begin business as soon 
as it wishes after the passage of the act. 

Such special acts, in the absence of general laws regulating the busi- 
ness of trust companies, define the powers and limitations of the com- 
pany. If general laws for such regulation of trust companies exist in 
the State, then the special act merely names the corporators, creates them 
a corporation under the name chosen, and confers upon them the author- 
ity to transact a trust company business under the general laws in force 
relating to such corporations. 

The charters of companies established in the early years of the trust 
company movement have had added to them numerous amendments grant- 
ing larger powers, as the Legislatures became more liberal in such mat- 
ters. The amendments are passed by the Legislature in the form of 
special acts, and become part of the charter upon their formal accept- 
ance by the company. In cases where general laws regulating the busi- 
ness of trust companies have been passed subsequent to the granting of 
special charters, such general laws, or parts of them, become part of the 
charter of the company upon their acceptance by the latter. The follow- 
ing charter of a large Boston company,* doing both a banking and a 



* Trust companies in Massachusetts were formerly incorporated only by 
special act. They may now be incorporated under the general incorporation law 
for trust companies, signed by the Governor May 25, 1904. 



ORGANIZATION OF TRUST COMPANIES. 69 

trust business, will illustrate the usual form and scope of these special 
charters and of acts amending same: 

COMMONWEALTH OF MASSACHUSETTS. 

THE NEW ENGLAND TRUST COMPANY. 

Act of Incorporation, Granted April 22, 1869. 

Section 1. Nathaniel Thayer, John C. Lee, Benjamin T. Reed, their asso- 
ciates and successors, are hereby made a corporation by the name of "The New 
England Trust Company," to be located in the City of Boston, for the purpose 
of holding property, in trust, and for other purposes hereinafter set forth; and 
subject to all the duties, restrictions and liabilities set forth in all general 
laws which now are or may hereafter be in force in relation to such corporations. 

CAPITAL. 

Section 2. The capital stock of said corporation shall be an amount not 
exceeding in the whole the sum of one million dollars (as amended March 30 y 
1871), divided into ten thousand shares of one hundred dollars each, and the 
same shall be paid for at such time and in such manner as the board of directors 
shall decide; 'provided, that no business shall be transacted by the corporation 
until the whole amount is subscribed for, and at least one hundred thousand 
dollars shall have been actually paid in and invested according to law, and no 
shares shall be issued nor dividends made until the par value of such shares shall 
have been actually paid in cash. 

POWERS. 

Section 3. The said corporation shall have power to receive and hold 
moneys or property in trust or on deposit from courts of law or equity, includ- 
ing courts of probate and insolvency, executors, administrators, assignees, guard- 
ians, trustees, corporations or individuals, upon such terms or conditions as may 
be obtained or agreed upon. 

Section 4. Any court of law or of equity, including courts of probate and 
insolvency of this State, may, by decree or otherwise, direct any moneys or 
property under its control, or that may be paid into court by the parties to any 
legal proceedings, or which may be brought by reason of any order or judgment 
in equity or otherwise, to be deposited with said corporation upon such terms 
and subject to such instructions as may be deemed expedient by said court; 
provided, however, that said corporation shall not be required to assume or exe- 
cute any trust without its own assent. 

INVESTMENTS. 

Section 5. It shall be lawful for said corporation to invest its capital and 
all the moneys intrusted to it, or in any way received by it, in the authorized 
loans of the United States, or of any of the New England States, or cities or 
towns of this Commonwealth; in the stock of national banks organized within 
this Commonwealth; in the first mortgage bonds of any railroad company which 
has earned and paid regular dividends for two years next preceding such invest- 
ment, or in the bonds of any such railroad company as is unincumbered by 
mortgage, or in the stock of such railroad companies incorporated by this State; 
and the said corporation may make loans upon mortgages on real estate within 
this Commonwealth, or upon the notes of corporations created under the laws 
of this Commonwealth, and the notes of individuals, with a sufficient pledge as 
collateral, of any of the aforesaid securities; but all real estate acquired by fore- 
closure of mortgages, or by levy of execution, shall be sold at public auction 
within two years of such foreclosure or levy. 

Amended Charter — Section 2. It shall be lawful for the said corporation to 
invest its capital, and all moneys held by it in trust, in the authorized loans of 
any of the counties, cities, or towns in any of the New England States, or 



70 TRUST COMPANIES. 

to loan the same to this Commonwealth, or to any county, city or town therein; 
and said corporation may also invest such capital and moneys in any other 
securities in which savings banks now are or hereafter may be allowed to invest, 
and shall be subject to and governed by the provisions concerning savings banks 
which are contained in sections one hundred and forty-three and one hundred 
and forty-six of chapter 57 of the General Statutes.* 

BANKING-HOUSE. 

Section 6. Said corporation may hold real estate in the City of Boston, 
suitable for the transaction of its business, to an amount not exceeding two 
hundred thousand dollars. 

EXAMINATION BY SAVINGS BANK COMMISSIONER. 

Section 7. The said corporation shall semi-annually make a return to the 
Commissioner of Savings Banks of this Commonwealth, on or before the sec- 
ond Mondays of May or November, which shall be signed and sworn to by a 
majority of its board of directors, stating the full amount of its capital stock 
and of all moneys and property, in detail, in the possession or charge of said 
company, as deposits, trust funds, or for purposes of investment; and the Com- 
missioner of Savings Banks shall have the same access to the vaults, books, and 
papers of this corporation, and it shall be his duty to inspect, examine and inquire 
into its affairs, and to take proceedings in regard to them in the same manner 
and to the same extent as if this corporation were a savings bank, subject to all 
the general laws which now are or hereafter may be in force in relation to such 
institutions in this regard. 

TAXES. 

Section 8. Repealed by the amended charter, and the following substituted: 
Section 8. Said corporation shall be subject to the provisions of chapter 
two hundred and eighty-three of the acts of the year eighteen hundred and sixty- 
five, and any acts now existing, or which may hereafter be passed in amendment 
or lieu thereof; it shall also, annually, between the first and tenth days of May, 
return to the tax commissioner a true statement, attested by the oath of some 
officer of the corporation, of all personal property held upon any trust on the 
first day of May, which would be taxable if held by an individual trustee residing 
in this Commonwealth, and the name of every city or town in this Commonwealth 
where any beneficiary resided on said day, and the aggregate amount of such 
property then held for all beneficiaries resident in each of such cities and towns, 
and also the aggregate amount held for beneficiaries not resident in this Com- 
monwealth, under the pains and penalties provided in section fourteen of chapter 
two hundred and eighty-three of the acts of the year eighteen hundred and sixty- 
five, and acts in amendment thereof, for corporations failing to make the returns 
provided by said act. Said corporation shall annually pay to the Treasurer of 
the Commonwealth a sum to be ascertained by assessment upon an amount equal to 
the total value of such property at a rate to be ascertained and determined by 
the tax commissioner, under section five of chapter two hundred and eighty-three 
of the acts of the year eighteen hundred and sixty-five and acts in amendment 
thereof. 

No taxes shall be assessed in any city or town for state, county, or town 
purposes, upon or in respect of any property held in trust as aforesaid; but 
such proportion of the sum so paid by said corporation, as corresponds to the 
amount of such property held for beneficiaries resident in this Commonwealth, 
shall be credited and paid to the several cities and towns where it appears, from 
the returns, or other evidence, that such beneficiaries resided on the first day 
of May next preceding, according to the aggregate amount so held in trust for 
beneficiaries residing in such cities and towns respectively; and, in regard to such 



* General Statutes, Chapter 57. 

Section 143. "No such corporation shall hold, both by way of investment 
and as security for loans, more than one-half the capital stock of any bank, nor 
have more than seventy-five per cent, of its deposits invested in mortgages of 



ORGANIZATION OF TRUST COMPANIES. 71 

tax so to be assessed and paid as aforesaid, said corporation shall be subject to 
sections eleven, twelve, thirteen, the last paragraph of section fifteen, and sec- 
tion seventeen, of chapter two hundred and eighty-three of the acts of the year 
eighteen hundred and sixty-five and acts in amendment or lieu thereof, so far 
as the same are applicable thereto. 

FINANCIAL AGENCIES. 

Section 9. The said corporation is also authorized to act as agent for the 
purpose of issuing, registering, or countersigning the certificates of stock, bonds, 
or other evidences of indebtedness of any corporation, association, municipality, 
state or public authority, and to receive and make payments on account of the 
same, on such terms as may be agreed upon. 

CHARTER PERPETUAL. 

Section 10. This act shall take effect upon its passage, and shall continue 
in force fifty years, unless sooner modified or terminated by the Legislature. 

Amended as follows — Section 4- Section eight, and so much of section ten, 
of chapter one hundred and eighty-two of the acts of the year eighteen hundred 
and sixty-nine, as limits the existence of said corporation to fifty years, is hereby 
repealed. 

Amended Charter — Section 5. This act shall take effect whenever it shall 
be accepted by a vote of said corporation, at a meeting warned for the purpose. 

Within thirty days after such acceptance, a copy of the vote accepting the 
same, certified by and attested by the oath of the President, or one of the Vice- 
Presidents of the corporation, and the Secretary thereof, shall be filed in the 
office of the Secretary of State, and such certificate shall be conclusive evidence 
of such acceptance. 

The amended charter was duly accepted April 15, 1871, and the proper 
certificate filed. 



AN ACT 

TO AMEND THE CHARTER OF THE NEW ENGLAND TRUST COMPANY. 

Be it enacted by the Senate and House of Representatives, in General Court 
assembled, and by the authority of the same, as follows: 

Section 9. The New England Trust Company may be appointed trustee 
under any will or instrument creating a trust, for the care and management of 
property, under the same circumstances, in the same manner, and subject to 
the same control by the court having jurisdiction of the same, as in the case of a 
legally-qualified person. The capital stock of said corporation, with the liabili- 
ties of the stockholders existing thereunder, shall be held as security for the 
faithful discharge of the duties undertaken by virtue of this act, and no surety 
shall be required upon the bonds filed by said corporation. In all proceedings 
in the probate court or elsewhere, connected with any authority exercised under 
this act, all accounts, returns, and other papers may be signed and sworn to in 
behalf of the corporation, by any officer thereof duly authorized by it; and the 
answers and examinations, under oath of such officer, shall be received as the 
answers and examinations of the corporation, and the court may order and 
compel any and all officers of said corporation to answer and attend said 
examinations in the same manner as if they were parties to the proceedings or 



real estate, nor invest more than ten per cent, thereof, and not to exceed one 
hundred thousand dollars, in the capital stock of any corporation." 

Section 146. "No member of a committee or officer of such corporation 
charged with the duty of investing its funds, shall borrow or use any portion 
thereof, be surety for loans to others, or in any manner, directly or indirectly, 
be an obligor for money borrowed of or loaned by the corporation." 



72 TRUST COMPANIES. 

inquiry instead of the corporation; provided, however, that said corporation shall 
not be required to receive or hold any property or moneys or to execute any 
trust contrary to its own desire. 

Sectiok 2. In the management of money and property held by it as trustee 
under the powers conferred in the foregoing section, said corporation shall in- 
vest the same in the general trust fund of the company; provided, that it shall 
be competent for the authority making the appointment to direct, upon con- 
ferring the same, whether such money and property shall be held separately or 
invested in the general trust fund of the company; and provided, also, that said 
corporation shall always be bound to follow, and be entirely governed by all 
directions contained in any will or instrument under which it may act. 

Section 3. No money, property, or securities received or held by said 
company under the provisions of this act shall be mingled with the investments 
of the capital stock or other moneys or property belonging to said corporation, 
or be liable for the debts or obligations thereof. 

Section 4. The returns of said corporation required to be made to the 
Commissioners of Savings Banks shall be in the form of a trial balance of its 
books, and shall specify the different kinds of liabilities, and the different kinds 
of its assets, stating the amount of each kind, in accordance with a blank form 
to be furnished by said commissioners. And these returns shall be published 
in a newspaper of the City of Boston, at the expense of said corporation, and 
in the annual report of said commissioners. 

^Section 5. This act shall take effect upon its acceptance by said cor- 
poration, which acceptance, with the date thereof, shall within ten days there- 
after be certified by the President of the corporation to the Secretary of the 
Commonwealth. 

Approved May 16, 1877. 

[Accepted by the corporation at special meeting, June 1, 1877.] 



AN ACT 

TO ALLOW THE NEW ENGLAND TRUST COMPANY TO MAKE ADDITIONAL INVESTMENTS. 

Be it enacted, etc., as follows: 

Section 1. The New England Trust Company, incorporated under chapter 
one hundred and eighty-two of the acts of the year eighteen hundred and sixty- 
nine, may, in addition to the investments which it is authorized to make, invest 
the moneys intrusted to it, or in any way received by it, in the notes of manu- 
facturing corporations created by the laws of any of the New England States, 
the property of which is unincumbered by mortgage, and which have paid a div- 
idend for the two years next preceding such investment; also to take as collateral 
upon the notes of individuals, citizens of this state, for a period not exceed- 
ing four months, the bonds of cities in the United States containing at least 
one hundred thousand inhabitants, whose net indebtedness does not exceed five 
per cent, of the valuation of the taxable property therein, to be ascertained by 
the last preceding city valuation for the assessment of taxes, and selling in the 
market above par; provided, that said bonds shall be taken at not over eighty 
per cent, of the market value thereof. 

Section 2. This act shall take effect upon its acceptance by the New 
England Trust Company. Approved March 16, 1882. 

[Accepted April 10, 1882.] 

Where general laws regulating the trust company business are in 
force, the special act, as stated above, may not recite the powers and 
limitations of the company in detail, but merely refer to the general law 
covering the case. The following is an illustration of such a special act: 






ORGANIZATION OF TRUST COMPANIES. 73 

CHARTER OF THE FEDERAL TRUST COMPANY. 

COMMONWEALTH OF MASSACHUSETTS. 

In the Year One Thousand Eight Hundred and Ninety-Nine. 

AN ACT 

To Incorporate the Federal Trust Company. 

(Chapter 92, Acts of 1899.) 

Be it enacted by the Senate and House of Representatives in General Court 
assembled, and by the authority of the same, as follows: 

Section 1. James W. Kenney, Thomas B. Fitzpatrick, Josiah S. Dean, James 
M. Morrison, Charles J. Connelly, John W. Home, William J. Emerson, Thomas 
L. Jenks, Joseph B. Horton, Jeremiah C. Spillane, John J. Johnston, William 
J. Carlin, Pierce Powers, John E. Stanton, John B. Fitzpatrick, Lawrence J. 
Logan, Thomas F. Galvin and Joseph H. O'Neil, their associates and successors, 
are hereby made a corporation under the name of the Federal Trust Company. 

Section 2. Said corporation shall have authority to establish and maintain 
a safe deposit and trust company in the City of Boston, with all the powers 
and privileges and subject to all the rights, duties, liabilities, and restrictions set 
forth in all general laws which now are or hereafter may be in force relating 
to such corporations. 

Section 3. This act shall take effect upon its passage. 

House of Representatives, February 14, 1899. 

John L. Bates, Speaker. 

In those States whose laws maks no special provisions for the 
incorporation of trust companies, and where the system of special 
acts granting charters does not prevail, such corporations are organized 
under the general incorporation laws or under the banking laws. The 
forms for such incorporation vary somewhat in the several States, but the 
incorporation certificate, which is forwarded to the Secretary of State, 
usually specifies the names of the corporators, the name of the proposed 
corporation, its location, its purpose, and powers desired, the amount of 
its capital and number of shares into which it is divided, and the date of 
the instrument. The Secretary of State examines the certificate to make 
sure that it contains nothing inconsistent with the laws of the State, and 
if he finds that it is all right in this respect, issues his certificate that the 
articles of incorporation have been filed, and that the company has au- 
thority to do business. 



CHAPTER IV. 

TRUST COMPANY LEGISLATION. 

DURING the past few years there has been much activity among the 
lawmakers of the various States in the enactment of laws relating 
to trust companies. At the meeting of the Trust Company Sec- 
tion of The American Bankers' Association in 1897, it was stated that 
only nineteen of the States had general trust company laws.* 

In 1914, all of the States have some sort of general legislation re- 
garding trust companies, though in several cases such legislation is very 
incomplete. Thirty-nine States provide for the incorporation of trust 
companies under general laws relating to such corporations, and nine 
other States provide for their incorporation under the general banking 
or corporation laws, while their government and regulation is cared for 
by general laws relating to trust companies or to banks and trust com- 
panies. 

During the last decade a number of States, including Alabama, Con- 
necticut, Maine, Maryland, Massachusetts, North Carolina, Rhode Island, 
South Carolina and Virginia, which formerly provided for the organiza- 
tion of trust companies only by special charter, have enacted general 
laws for their incorporation. Such corporations are still incorporated 
by special charters in Delaware, New Hampshire and Vermont. In 
these States the powers of trust companies are defined by the special 
acts creating them, but in Vermont the general trust company law now 
defines and restricts such powers. 

In the thirty-nine States and Territories making special provision for 
the incorporation of trust companies, the number of corporators re- 
quired varies from 3 to 25, the latter number being required in the Dis- 
trict of Columbia, and the former in eleven different States. Five is 
a favorite number, fourteen States fixing it as a minimum. The num- 
ber required in New York is seven. 

Number of Directors Required. 

Many of the States stipulate the minimum, or the minimum and max- 
imum, number of directors that a trust company may have. In Arkan- 
sas, Colorado, Mississippi, Nevada, Washington and Wisconsin the min- 
imum number is 3; in Idaho, Maine, Nebraska, New Jersey and New 
Mexico, 5; in Indiana, 6; in Michigan and South Dakota, 7. Montana 
fixes the number at from 3 to 25; Iowa, 5 to 9; Florida, 5 to 15; Kan- 
sas, Missouri, Oklahoma and Texas, 5 to 25; Louisiana and Ohio, 5 to 
30; New York, 7 to 30; North Dakota, 9 to 15; Minnesota, 9 to 27; 
District of Columbia, 9 to 30; Marjdand, 11 to 30. 



Proceedings Trust Company Section, 1897, p. 158. 
74 



TRUST COMPANY LEGISLATION. 75 

The Amount of Capital Stock. 

The amount of capital stock which trust companies are required to 
have varies considerably in the different States and Territories, and is 
naturally smallest in States where the towns are apt to be small, — though 
this is by no means an invariable rule. In about one-fourth of the States 
having legislation on the subject, a definite minimum amount of capital 
is fixed without regard to the size of the town or city in which the com- 
pany is located. The other States arrange schedules in which the mini- 
mum capital required is determined by the size of the place in which the 
company is situated.* 

Thus, Mississippi, Nevada and South Carolina fix the minimum cap- 
ital with which trust companies may operate in these States at $25,000; 
Florida, Hawaii and Idaho, $50,000; Georgia, Kansas, Louisiana, Mis- 
souri, Montana, New Jersey, North Dakota, Virginia and West Virginia, 
$100,000; Pennsylvania, $125,000; District of Columbia, $1,000,000. 

The following States have schedules in which the minimum capital 
requirements for towns and cities of different populations range between 
the figures shown: North Carolina, from $5,000 to $25,000; Tennessee, 
from $7,500 to $50,000; Iowa, from $10,000 to $50,000; Wyoming, 
from $10,000 to $100,000; Alabama, Connecticut, Indiana and Washing- 
ton, from $25,000 to $100,000; Maine, from $25,000 to $150,000; 
Nebraska, Oklahoma and Illinois, from $25,000 to $200,000; New Mex- 
ico, Oregon, South Dakota. Texas and Wisconsin, from $50,000 to $100,- 
000; Massachusetts and Minnesota, from $50,000 to $200,000; Colorado, 
from $50,000 to $250,000; Maryland and New York, from $100,000 to 
$500,000; Michigan, from $150,000 to $300,000. 

In Arkansas, trust companies may have capital stock ranging from 
$10,000 to $50,000, according to location, but may not do a trust busi- 
ness unless the capital is at least $50,000. In Kentucky, trust compa- 
nies may have a capital ranging, according to location, from $15,000 
to $200,000; but banking and trust companies must have at least $50,- 
000 capital, and banking, trust and title insurance companies at least 
$150,000. In Ohio, combined trust companies and savings banks must 
have at least $100,000 capital, and combined trust companies, savings 
banks, commercial banks and safe deposit companies at least $125,000. 
In California, the capital required for companies doing a trust business 
only ranges from $100,000 to $200,000. Banks doing a commercial, 
savings and trust business must have from $125,000 to $500,000 capital, 
according to location, and the capital of the different departments must 
be segregated. 

Certain States prescribe maximum limits of capital stock which trust 
companies may have, as follows: Kansas and Massachusetts, not over 
$1,000,000; Georgia, Indiana, Minnesota and Pennsylvania, not over 



* Details of these schedules, as well as of other matters here mentioned, are 
given in Chapter XVII. 



76 TRUST COMPANIES. 

$2,000,000; Michigan and Wisconsin, not over $5,000,000; Missouri, 
Montana and Texas, not over $10,000,000. 

Powers and Capacities of Trust Companies. 

The powers, or capacities in which trust companies may act, are 
much the same in the different States which have general trust com- 
pany laws, save in the extent to which a regular banking business 
may be conducted. Such companies possess, of course, the powers 
generally granted to all corporations. The special powers are usually 
enumerated in detail; and in those cases where they are not so enumer- 
ated there is usually a provision authorizing them to undertake "any 
lawful trusts" and to conduct all "such business as is usually carried on 
by such companies." 

There is evidence that the trust company laws of the State of New 
York have been taken as a guide in the construction of trust company 
laws in many of the other States. This resulted, no doubt, both from the 
fact that New York has long been the financial centre of the country, 
and because it was early in the field with a general trust company law, 
such a law having been passed in 1887. The fact that New York's laws 
have for many years served as guides in many lines of legislation other 
than financial must also have had its influence. 

It will be useful to know in detail the provisions of the New York 
laws regarding the powers of trust companies, and the sections of the 
statutes giving these powers are therefore presented in full: 

POWERS OF THE TRUST COMPANIES OF NEW YORK. 
(As amended by Chapter 369, Acts of 1914.) 

Section 185. General Powers. — In addition to the powers conferred by the 
general and stock corporation laws, every trust company shall, subject to the 
restrictions and limitations contained in this article, have the following powers: 

1. To act as the fiscal or transfer agent of the United States, of any state, 
municipality, body politic or corporation; and in such capacity to receive and 
disburse money, to transfer, register and countersign certificates of stock, bonds 
or other evidences of indebtedness, and to act as attorney in fact or agent of 
any person or corporation, foreign or domestic, for any lawful purpose. 

2. To discount and negotiate promissory notes, drafts, bills of exchange 
and other evidences of debt; buy and sell exchange, coin and bullion; lend money 
on real or personal securities; and to receive deposits of moneys, securities or 
other personal property from any person or corporation upon such terms as 
the company shall prescribe. 

3. To lease, hold, purchase and convey any and all real property necessary 
in the transaction of its business, or which the purposes of the corporation may 
require, or which it shall anywhere acquire in settlement or partial settlement 
of debts due the corporation by any of its debtors, or to secure such debts, or 
through sales under any judgment, decree or mortgage held by it. 

4. To act as trustee under any mortgage or bonds issued by any munici- 
pality, body politic or corporation, foreign or domestic, and accept and execute 
any other municipal or corporate trust not prohibited by the laws of this state. 

5. To accept trusts from and execute trusts for married women, in respect 
to their separate property, and to be their agent in the management of such 
property or to transact any business in relation thereto. 

6. To act under the order or appointment of any court of competent juris- 
diction as guardian, receiver or trustee of the estate of any minor, and as deposi- 



TRUST COMPANY LEGISLATION. 77 

tary of any moneys paid into court, whether for the benefit of any such minor or 
other person, corporation or party, and in any other fiduciary capacity. 

To be appointed and to act under the order or appointment of any court 
of competent jurisdiction as trustee, guardian, receiver or committee of the 
estate of a lunatic, idiot, person of unsound mind or habitual drunkard, or as 
receiver or committee of the property or estate of any person in insolvency or 
bankruptcy proceedings; to be appointed and to accept the appointment of 
executor of or trustee under the last will and testament, or administrator with 
or without the will annexed of the estate of any deceased person. 

7. To take, accept and execute any and all such legal trusts, duties and 
powers in regard to the holding, management and disposition of any estate, real 
or personal, wherever located, and the rents and profits thereof, or the sale 
thereof, as may be granted or confided to it by any court of competent juris- 
diction, or by any person, corporation, municipality or other authority and it 
shall be accountable to all parties in interest for the faithful discharge of every 
such trust, duty or power which it may so accept. 

8. To take, accept and execute any and all such trusts and powers of 
whatever nature or description as may be conferred upon or entrusted or com- 
mitted to it by any person or persons, or any body politic, corporation, domes- 
tic or foreign, or other authority by grant, assignment, transfer, devise, bequest 
or otherwise, or which may be entrusted or committed or transferred to it or 
vested in it by order of any court of competent jurisdiction, or any surrogate, 
and to receive, take, manage, hold and dispose of according to the terms of such 
trust or power any property or estate, real or personal, which may be the sub- 
ject of any such trust or power. 

9. To purchase, invest in and sell stocks, bills of exchange, bonds and 
mortgages and other securities; and when moneys or securities for moneys are 
borrowed or received on deposit, or for investment, the bonds or obligations of 
the company may be given therefor, but it shall have no right to issue bills to 
circulate as money. 

10. To accept for payment at a future date, drafts drawn upon it by its 
customers and to issue letters of credit authorizing the holders thereof to draw 
drafts upon it or its correspondents at sight or on time, not exceeding one year. 

11. To receive, upon terms and conditions to be prescribed by the company, 
upon deposit for safe keeping, bonds, mortgages, jewelry, plate, stocks, securities 
and valuable papers of any kind, and other personal property, for hire, and to 
let out receptacles for safe deposit of personal property. 

12. To purchase and hold, for the purpose of becoming a member of a 
federal reserve bank, so much of the capital stock thereof as will qualify it for 
membership in such reserve bank, pursuant to an act of congress, approved 
December twenty-three, nineteen hundred and thirteen, entitled the "Federal Re- 
serve Act;" to become a member of such federal reserve bank, and to have and 
exercise all powers, not in conflict with the laws of this state, which are con- 
ferred upon any such member by the federal reserve act. Such trust company 
and its directors, officers and stockholders shall continue to be subject, however, 
to all liabilities and duties imposed upon them by any law of this state and to 
all the provisions of this chapter relating to trust companies. 

Sectiox 186. Additional Powers of Certain Trust Companies. — Every trust 
company which at the time this act takes effect lawfully possesses and exercises 
the power, for hire, to examine titles to real estate/ to procure and furnish 
information in relation thereto, and to guarantee or insure the title to real estate 
to persons interested, in such real estate or in mortgages thereon, against loss, 
by reason of defective title or other encumbrances of or upon, such real estate] 
shall continue to possess such power, but no other trust company shall hereafter 
have or exercise such power. 

Sectiok 187. Powers of Specially Chartered Trust Companies— Every trust 
company incorporated by a special law shall possess the powers of trust com- 
panies incorporated under this chapter and shall be subject to such provisions 
of this chapter as are not inconsistent with the special laws relating to such 
specially chartered company. 

It will be seen that the powers here granted are very wide. Those 
fiduciary powers that are not specifically granted are conceded bv the 



78 TRUST COMPANIES. 

general power to accept appointment to act in "any other fiduciary 
capacity," so that in the State of New York a trust company may act in 
any fiduciary capacity in which a natural person may act. The same 
broad powers are given to trust companies in most of the other States 
having general trust company laws, and are included in the special 
charters in most of the States creating such companies by special acts. 

Of the powers usually granted to trust companies by the State laws, 
some may properly be looked upon as essential or natural to a "trust" 
or "trustee" company, while others are manifestly auxiliary to its essen- 
tial powers. In the former group would be included powers to act as 
trustee for any purpose, as executor, administrator, guardian, agent, etc. 
Other powers, such as banking, savings banking, safe deposit, fidelity and 
title insurance, etc., more or less closely allied to the business of the 
typical trust company, may be classed as auxiliary powers. 

That the legislators have taken some such view of the case is evident 
from a study of the powers granted. Both in the States having general 
trust company laws and in those which charter trust companies by spe- 
cial act of the Legislature, there is practical unanimity in the granting 
of the powers included in the first group, while those in the second group, 
with the exception of safe deposit, are not so generally given. 

It is beyond the scope of the present inquiry to attempt to discuss 
the powers impliedly given to trust companies by the various statutes, or 
to assemble the decisions of the courts regarding the extent of such 
powers. But it will be useful to compare, briefly, the powers explicitly 
given to these companies by the States having general trust company 
laws. 

As already suggested, the greatest unanimity appears in the grant- 
ing of powers to act as trustee, as executor and administrator, as guard- 
ian, as agent, etc. 

The power to act as executor and administrator is specifically 
granted in all of the States having general trust company laws, 
except Maine and Wyoming. Wyoming permits the acceptance of "any 
trust in writing." In Ohio the statutes grant to trust companies the right 
to act as executor or administrator, but the courts have declared it un- 
constitutional for them to act as administrator. Maine presents an inter- 
esting case. In this State, trust companies may act as executor; but are 
expressly forbidden to act as administrator or as guardian, even if their 
special charters specifically grant such powers. 

The power to act as guardian of minors, persons non compos mentis, 
etc., is specifically granted in all of the thirty-seven States named except 
Maine and Wyoming. The guardianship of minors usually, and of other 
persons always, applies to the estate only. In most States the power 
named is to act "as guardian of the estates," etc.; in some, it is the in- 
definite power to "act as guardian." As a rule the statutes specifically 
state that the guardianship of minors shall be of the estate only, and 
not of the person. On the other hand, power to act as guardian of both 



TRUST COMPANY LEGISLATION. 79 

the estate and the person of minors is specifically given in Arkansas, 
Indiana, Kansas, Minnesota and Montana. In the District of Columbia, 
trust companies may act as guardian of the estate of a minor only with 
the consent of the guardian of the person. The limitation formerly spec- 
ified in the New York statutes, providing that trust companies may act 
as guardian of the estates of minors, the income of which is one hundred 
dollars per annum or more, is also found in the statutes of Colorado and 
Georgia. 

About one-half of the States specifically grant the power to accept 
and execute trusts for married women with respect to their separate 
estates. 

A power always included is that to act as trustee for various purposes. 
It is usually stated that the company may act as trustee for individuals, 
for corporations both public and private, for municipalities and States. 
The power to act as fiscal agent and as registrar and transfer agent is as 
a rule specifically given, as are also the powers to act as depositary of 
funds paid into court and of funds under the care of executors, admin- 
istrators, guardians, etc.; to manage estates; to receive trusts from courts; 
to hold deposits of trust moneys; to act as receiver or assignee; to act 
as agent for the investment of money; to make loans on real or personal 
property; to deal in bonds, stocks and securities. 

Regulations Regarding the Holding of Real Estate. 

The regulations regarding the holding of real estate by trust com- 
panies are usually somewhat more liberal than those which govern the 
real estate holdings of National banks, but a few States, notably 
Louisiana and Michigan, make provisions almost identical with those of 
the National Banking Act. Most of the States grant the power to hold 
such real estate as is necessary for the transaction of the company's busi- 
ness, and such as it may acquire in settlement or partial settlement of 
debts due to it. While the intent usually appears to be to limit the hold- 
ings much as those of National banks are limited, the language is often 
such as to permit of a liberal construction. As an example of statutes 
permitting such liberal construction, that of New Jersey reads as follows : 
"To lease, hold, purchase and convey any and all real estate necessary 
for or convenient in the transaction of its business, or which the purposes 
of the corporation may require, or which it shall acquire in satisfaction 
or partial satisfaction of debts due the corporation under sales, judg- 
ments or mortgages, or in settlement or partial settlement of debts due 
the corporation by any of its debtors." 

There are, however, great differences in the wording of the statutes 
in the different States relating to this matter, and it is not possible to 
form a correct idea of their purport without a separate and detailed ac- 
count of the statutes in each State. Perhaps the widest powers of this 
kind are those of trust companies in Pennsylvania, which, beside hold- 



80 TRUST COMPANIES. 

ing real estate that is the subject of title insurance by them, have the 
right "to purchase and sell real estate and take charge of the same/' 
and in Utah, where they may "buy, sell or mortgage" real estate. 

The right to hold real estate in trust for others is of course included 
in the trust powers given to trust companies. 

Auxiliary Powers of Trust Companies. 

Of the powers usually looked upon as auxiliary to the main business 
of trust companies, that of conducting a safe-deposit business is the one 
which the States are most nearly unanimous in granting. Indeed, this 
business has come to be looked upon as being quite as essential to trust 
companies in the larger cities as any other function. 

The fidelity insurance business is specifically permitted to trust com- 
panies in about one-third of the States, while in a number of others 
trust companies are given more or less limited powers in the way 
of guaranteeing bonds and acting as surety for particular purposes. 
West Virginia specifically prohibits trust companies from acting as 
surety on bonds or guarantor for individuals, firms or corporations. 
Connecticut prohibits trust companies from engaging in any kind of in- 
surance business, except that certain companies already engaged in title 
insurance are allowed to continue. 

About a fourth of the States grant the specific power to trust compa- 
nies to conduct a title insurance business. In Pennsylvania trust com- 
panies are organized under the title insurance company law, which 
giants most of the trust powers. 

Banking Powers of Trust Companies. 

In view of the great extent to which trust companies engage in the 
business of both savings and commercial banking, the statutory pro- 
visions regarding the transaction of such business are of special interest. 
But even a cursory examination of the statutes reveals the fact that the 
power to conduct such business usually depends more upon the implied 
powers and upon the interpretation of the statutes than upon powers 
specifically granted. One is met at the outset by the question as to what 
constitutes banking powers as distinguished from trust powers in the 
handling of funds. There is evidence that the legislators themselves 
were in most cases not clear as to the extent to which they were permit- 
ting the banking business. In several States, as for example Colorado 
and Pennsylvania, trust companies are forbidden to engage in banking 
"except as herein authorized;" while they seem to be authorized to un- 
dertake several important banking functions. In Colorado specific pow- 
ers are granted to receive demand deposits and to "purchase" bills of 
exchange, etc., and to loan on real or personal security. The same 
powers are held by trust companies in Pennsylvania. The power to pur- 
chase commercial paper differs only in form from the power to discount 



TRUST COMPANY LEGISLATION. 81 

it, and not much ingenuity is required to do an actual discount business 
under these statutes, and such discounting in the form of purchase is 
widely carried on in Pennsylvania. 

So far, then, as the receiving of both demand and time deposits, the 
discounting of commercial paper and the making of loans on real and 
personal security constitute a banking business, trust companies in these 
States may do a banking business in spite of the apparent intention to 
forbid such business. 

Another interesting case is that of New Jersey. In this State trust 
companies are forbidden "to discount commercial paper;" but they have 
specific authority "to purchase, invest in and sell * * * promissory 
notes, bills of exchange. * * * :: They also have specific authority 
to receive deposits subject to check. 

The majority of the States now grant the specific powers to pur- 
chase or discount commercial paper, and to receive both demand and 
time deposits, and there are only a few States in which trust companies 
do not as a matter of fact transact a banking business, either by direct 
statutory power, or by a liberal interpretation of the law. In several 
States, as for example. California, Kentucky and Ohio, the statutes pro- 
vide for the organization of combined banks and trust companies. In 
fact, the tendency of most general banking and trust company legisla- 
tion of recent years has been towards the authorization of such com- 
bined companies. At the present time, the prohibition of banking busi- 
ness by trust companies is most emphatic in Michigan, Nebraska and 
Wisconsin. 

The fact is that it is a very difficult task to draw a hard and fast 
line between banking business and business in the handling of money 
that is purely and simply a trust business. Indeed, banking is itself, in 
a sense, a trust business. If extreme instances be taken, it is of course 
a simple matter to say that this is a trust business, and that is a banking 
business. But just where to draw the line between the two classes of 
functions is quite a different matter. When, therefore, the legislator sets 
before himself the task of forbidding trust companies to do a banking 
business, he must solve not only the problem of how to provide for the 
enforcement of the statutes he may devise, but also the more intricate 
problem of clearly distinguishing between that which he means to au- 
thorize and that which he means to forbid. On the whole, considering the 
difficulty of the problem, and the industrial conditions under which trust 
companies have developed, it is not surprising that trust companies in 
most States do a banking business in spite of the lack of specific 
authority. 

A noticeable thing about the powers usually granted to trust compa- 
nies is the evident intention to place them on an absolute par with nat- 
ural persons in their power to accept and execute trusts of every de- 
scription. In a considerable number of the States the statutes carefully 
provide that such corporations may accept and execute any trusts not 



82 TRUST COMPANIES. 

inconsistent with the laws of the State and of the United States, "to the 
same extent and in the same manner as natural persons." 

Regarding the powers of trust companies in those States where their 
charters are granted only by special act of the Legislature, it is not 
possible to speak in general terms without an examination of each and 
every such charter, further than to say that as a general rule the powers 
so given are quite as wide and as varied as those given by general laws. 

In the few States in which no trust company laws exist, and where 
special charters are not granted, considerable ingenuity has been neces- 
sary to carry on the trust business under the general corporation laws. 
Americans are not lacking in ingenuity, and the way has usually been 
found when needed. Thus, where the corporation had not the power to 
act as trustee, administrator, etc., individual directors or officers have 
taken such appointments, the companies have furnished the necessary 
security, and the business in its details has been performed by the com- 
pany. In the State of Washington, before the passage (in 1903) of the 
Trust Company Law, some of the courts held, contrary to the usual legal 
ruling, that trust companies, being created artificial "persons," were 
therefore endowed with the powers of natural "persons." The well- 
established principle of the common law is that corporations possess only 
such powers as are specifically granted in their charters. 

Statutory Provisions for the Regulation of Trust Companies. 

Statutes intended to throw safeguards about the prosecution of the 
business of trust companies are found in a majority of the States having 
general trust company laws, and also among a number of the States in 
which such corporations are chartered by special acts of the Legisla- 
tures. 

The methods commonly relied upon in such statutory attempts at reg- 
ulation and supervision include provisions for a capital adequate to sup- 
port the probable credit operations of the company and to provide secur- 
ity for its creditors; the accumulation of a surplus fund, to supplement 
the good accomplished by the provision for adequate capital; the double 
liability of stockholders; deposit with State authorities by the trust com- 
pany of moneys or securities to be held in trust for the security of cred- 
itors of the trust department; restrictions on loans, on investments, on 
general liabilities and on the manner of conducting the trust business; a 
sufficient reserve fund; supervision by State officials, through reports of 
condition, and examinations. 

Few States attempt all these methods of regulation, and the lack of 
uniformity in the State laws in this particular is noticeable and regret- 
table. 

The suggestion has been made that Federal control of trust compa- 
nies would be of advantage, especially to the end of securing uniformity 
in the laws governing such corporations. Doubt has been expressed 



TRUST COMPANY LEGISLATION. 83 

whether, in view of the diversity of conditions existing in the various 
States, a uniform law is desirable, the opinion being held by 
many that to place all trust companies under uniform restraint, irre- 
spective of local conditions, would unduly restrict the operations of these 
corporations. However this may be, a uniform law seems to be imprac- 
ticable for other reasons. It seems possible, however, that effectual reg- 
ulation might be obtained by concerted action on the part of trust com- 
pany officials and their associations. The matter has already engaged 
the attention of the Trust Company Section of the American Bankers' 
Association. 

The provisions of the various States regarding the minimum capital 
with which trust companies may be organized have already been dis- 
cussed. It need only be added now that for the most part the 
provisions in this matter are all that could be expected. In most 
cases, the minimum capital required could hardly be raised without prac- 
tically prohibiting the organization of trust companies. It is generally 
recognized that trust companies ought to have a larger capitalization 
than banks, and the amount required usually compares very favorably 
with that required for both State and National banks in the same com- 
munities ; the minimum capital being as a rule much larger than that 
required of State banks. 

The accumulation of a surplus fund is a proceeding that trust com- 
panies in most communities adopt as a matter of course, being impelled 
thereto by the manifest advantages of such a step as a measure of safety 
and as a means of gaining business in competition with other companies 
having large surplus funds. Perhaps it is on this account that the legis- 
lators have not always considered it necessary to place in the statutes 
a requirement for the accumulation of such a fund, although it may also 
be explained by the other provisions for safety adopted, which may have 
been thought ample in many cases. However, about one-half the 
States require that a surplus be accumulated by trust companies. The 
provision is common among them that before a dividend is declared one- 
tenth of the net profits for the preceding period must be carried to 
surplus until the surplus amounts to a certain percentage of the capi- 
tal. This percentage is usually twenty per cent., but in a few cases it 
is fifty per cent. In Vermont the surplus must be built up until the 
surplus and capital equal ten per cent, of the deposits and other liabili- 
ties except capital, surplus and trust funds. 

In about one-half of the States, the stockholders of trust companies 
are subject to double liability; i. e., they are liable for the debts of the 
corporation to an amount equal to the par value of their stock, in addi- 
tion to full payment for such stock. 

A number of the States require trust companies to deposit cash or se- 
curities of a specified character with State officials, to be held in trust 
as security for the company's creditors. As a rule these deposits are for 
the special protection of creditors of the trust department, and in such 



84 TRUST COMPANIES. 

cases the deposit is ordinarily not required unless the company under- 
takes such trusts as those of executor, administrator, guardian, etc. A 
few of the States, however, make this deposit a protection to all of the 
company's creditors, and require such deposit before the company is 
authorized to do business. The income from such deposits goes to the 
company so long as it is solvent. In several States the deposit is stated 
to be in lieu of giving special bond or security in the case of each trust, 
and need not be made if the company elects to give such special bonds 
instead. In other words, the making of the deposits in these States is 
optional with the company. The amounts of these deposits are as fol- 
lows: California, $100,000 to $200,000 — increased if the trust funds 
reach certain amounts ; District of Columbia, one-fourth of the capital 
stock paid in; Florida, twenty-five per cent, of the capital stock, but not 
less than $25,000; Illinois, $50,000 to $200,000; Maryland, from ten to 
fifteen per cent, of the capital, and not less than $10,000 or $30,000, 
depending upon amount of capital: Michigan, fifty per cent, of the 
capital, but not more than $200,000 in amount; Minnesota, twenty-five 
to fifty per cent, of the capital, according to the amount of the capital; 
Missouri, $200,000 (optional); Nebraska, $10,000 to $40,000, depending 
upon the amount of the capital; New Jersey (if doing certain trust 
business), one-fifth of fiduciary liabilities, if less than $100,000, or one- 
tenth thereof if over $100,000; New Mexico, from $50,000 to $200,000 
(optional) ; New York, ten per cent, of capital stock, but not less than 
from $20,000 to $100,000, according to capital; North Dakota, $50,- 
000; Ohio (if doing a trust business), from $50,000 to $100,000, ac- 
cording to amount of capital : Oklahoma, $50,000 (optional) ; Oregon 
(if accepting trusts), from $25,000 to $50,000, depending upon capital, 
which amount must be increased to not exceeding $100,000 if trust 
funds and securities exceed ten times the deposit; Rhode Island, twenty 
per cent, of the capital; South Dakota, fifty per cent, of capital, but 
not over $100,000; Texas, $50,000 (optional); Wisconsin, fifty per 
cent, of capital, but not more than $100,000. 



Restrictions in Relation to Loans. 

The majority of the States having any kind of trust company legis- 
lation place restrictions on trust companies regarding their loans, their 
investments or their total liabilities. Such restrictions vary greatly in the 
different States, being quite ample in some, and very meagre in others. 
The most common provisions are those forbidding trust companies to 
make loans on their own stock as security, and to make loans to their 
directors, officers or employees. Where the classes of investments for 
capital and trust funds are specified, the investments permitted are 
usually in municipal bonds, railroad bonds and mortgages secured by 
ample margin on real estate. Several States forbid trust companies to 



TRUST COMPANY LEGISLATION. 85 

invest in the stocks or bonds of private incorporated companies. Among 
other provisions sometimes found are those limiting the amount of loans 
to one person, firm or corporation, the limit often being ten per cent, of 
the capital and surplus, except that on loans secured by collateral it may 
be twenty per cent. 

Many of the States provide that trust funds and accounts must be 
kept separate from all other funds and accounts of the company. 

Largely as a result of efforts made by the American Bankers' Asso- 
ciation, statutes have been passed in most of the States forbidding the 
use of the word "trust" in titles by any but regularly organized trust 
companies. 

Trust Company Reserves. 

The question of trust company reserves is of special interest. The 
fact that trust companies compete to so great an extent with banks has 
resulted in a growing demand from the banks especially, and from the 
general public to some extent, that trust companies be placed under the 
same regulations as banks, particularly in the requirement of a reserve 
fund. The battle over this point has been waged with special fierceness 
in New York, where, until 1908, there was no provision for reserves of 
trust companies. Until recent years, there was some need for such agitation 
in a number of States which were lacking in legislation on the subject, 
and there are still a few States in which there is no requirement as to 
reserve. This does not mean, of course, that trust companies in these 
States did not actually keep reserve funds, for the unwritten laws of 
business and of competition are quite as insistent upon obedience as are 
the laws of the statute books. The best-managed companies everywhere 
keep as large reserves as their business demands ; and it is for the poor- 
ly-managed concerns that the statutory provisions are necessary, just as 
criminal laws are needed, not for the. laAv-abiding people, but for the law- 
less. If the wisdom of State regulation in any particulars is conceded, 
the necessity of a requirement for an adequate reserve fund certainly 
must be. 

An examination of the statutes shows that where the question has 
been taken up and acted upon by the State legislators, the opinion has 
quite generally prevailed that the reserve required to be kept by trust 
companies ought to be about the same as that required of State banks. 

The following table shows the reserves required of trust companies 
in various States. Except where otherwise stated, the percentages refer 
to the ratio of reserve to aggregate deposits. In some cases the reserve 
named in the table applies to trust companies only when they do a bank- 
ing business ; in which case it is frequently the same as for banks. 



86 



TRUST COMPANIES. 



Alabama 
Arizona 
Arkansas 
California 



Colorado 

Connecticut 
Delaware 

Florida 

Georgia 

Idaho 

Indiana 

Iowa 



Kansas 
Kentucky 

Louisiana 
Maine 
Maryland 
Massachusetts 

Michigan 
Mississippi 



Missouri 

Montana 

INevacla 

New Hampshire 

New Jersey 

New Mexico 

New York 



North Carolina 

Ohio 

Oregon 

Pennsylvania 
Rhode Island 
South Dakota 
Tennessee 
Texas 
Utah 

Vermont 
Washington 
West Virginia 
Wisconsin 
Wyoming 



15%, 2-5 cash. 

15%, 2-5 cash. 

15%, "part" in cash; 20%, if a reserve bank. 

15% commercial deposits, 2-5 cash, and 4% savings deposits, y s 

cash; if a reserve bank, 20% commercial deposits instead of 

15%. 
20% commercial deposits and 15% savings deposits, 1-5 cash; h 

a reserve bank, 25% of deposits. 
15%, 4-15 cash. 
10% in towns of less than 50,000 population; 15% elsewhere; 1-3 

cash. 
20%, 2-5 cash. 
25% demand deposits. 
15%, 2-5 cash. 

15% demand deposits, in cash or on deposit. 
15% commercial deposits and 8 per cent, savings deposits if in 

towns of less than 3,000 population; elsewhere, 20% and 8%, 

respectively; y 4 cash. 
25% demand deposits and 10% time deposits. 
12% demand deposits and 5% time deposits; in reserve cities, 

15% and 5%, respectively; 1-3 cash. 
25% of demand deposits, 8% cash. 
15% demand deposits. 
15% demand deposits. 
15% demand deposits, 2-5 cash; if in Boston, within three miles 

of State House, 20%. 
20%, ^cash. 
15% demand deposits and 7% time deposits; in cities of over 

50,000 population, 25% and 10%, respectively; in cash or on 

deposit. 
15% of demand deposits. 
15%. 

15%, 1-3 cash. 
15% demand deposits. 
15% demand deposits, 1-5 cash. 
15%, 2-5 cash. 

15%, 2-5 cash, if located in a borough of 2,000,000 or more pop- 
ulation; 13%, 8-13 cash, if located in a borough of from 

1,000,000 to 2,000,000 population, with no office in a larger 

borough; 10% elsewhere in state; in cities of the first and 

second class not included above, 4-10 cash; in cities of the 

third class and smaller places, 3-10 cash. 
Members of Federal Reserve Banks may keep reserves required of 

such members. 
15%, 2-5 cash. 

15%, 6% of demand deposits and 4% of time deposits in cash. 
15%, in cities of less than 50,000 population; in larger cities, 25% 

demand deposits and 15% time deposits, 1-3 cash. 
15% demand deposits and 7% time deposits, 1-3 cash. 
15%, 2-5 cash. 



25% demand deposits, 14 cash. 

10% demand deposits, in cash or on deposit. 

25% demand deposits, 2-5 cash. 

15% demand deposits: In cities of over 50,000 population, 20%, 

y 8 cash; also 10% savings deposits, 14 cash. 
15% commercial deposits and 3% savings deposits, 1-3 cash. 
20% demand deposits. 
15% demand deposits, 2-5 cash. 
15%. 
25%. 



TRUST COMPANY LEGISLATION. 87 

Reports and Examinations. 

Whatever restrictions are placed upon these corporations by the 
statutes, such restrictions must evidently be of little avail in the cases of 
those companies which are inclined to evade the law, unless means be 
provided of keeping the State officials acquainted with the way in which 
their business is being conducted. The natural ways of accomplishing 
this result are by means of frequent reports and of examinations. The 
value of reports is of course in direct ratio to the honesty and frankness 
of the officials of the company making such report, and their usefulness 
therefore becomes slight when made by dishonest officers. It is a matter 
of common knowledge that reports may be easily "doctored" so as to 
make an insolvent institution appear very prosperous, and that the last 
reports published by defunct companies usually indicate a sound condi- 
tion. But if the requirement of reports be made in connection with fre- 
quent examinations which reveal the truthfulness or untruthfulness of 
the reports, they serve a useful purpose. 

The laws now require trust companies to furnish reports of some 
kind in all of the States. The frequency of such reports varies from 
one to five times per annum; and in the States having the most care- 
fully prepared laws on the subject, special reports may be called for at 
any time by the State official to whom the reports are made. A number 
of the States designate the character of the information to be given in 
the reports, and some of them specify in detail and at some length the 
exact form required for such reports, the form in a few States requir- 
ing a complete list of all investments, and a description of the property 
held in trust. The completeness of these reports is in striking contrast 
with the meagreness of those which satisfy the requirements of the law 
in some of the States, where the provisions on the subject are most un- 
satisfactory. Most of the States which require reports provide that they 
must be published in a local newspaper. 

Trust companies are liable to some sort of an examination by State 
officials in nearly all of the States; but in a few of these the examina- 
tions need not be made periodically, but only at the discretion 
of an official who very probably has little time or inclination for the 
work, so that companies may go for years without examination. In all 
of the States the courts probably have the right to investigate a trust 
company's handling of trusts committed to them by such courts to the 
same extent as though the trusts were committed to individuals. This 
right is specifically mentioned in a majority of the States. A few States 
also provide that the books of the company shall be open to inspection 
by persons interested in any trust held by the company. 

Where periodical examinations are required, their frequency is either 
once or twice per annum, with special examinations at any time at the 
discretion of the examining official, except in Texas, which requires an 
examination every quarter year. 



88 TRUST COMPANIES. 

The State officials under whose supervision trust companies are placed 
in the different States vary greatly. Where a State banking department 
is in existence, the head of that department has supervision of trust com- 
panies. In a few States this duty is entrusted to the State Insurance 
Commissioner. In other States it is exercised by the State Auditor, the 
State Treasurer, or the Secretary of State. In the District of Columbia 
the Comptroller of the Currency has supervision of trust companies. 

In about half of the States trust companies are under practically 
the same regulations regarding reports, examinations, etc., as the 
State banks. 

The principle of State supervision of banks, insurance companies 
and other financial institutions is pretty thoroughly established in this 
country, although there are those whose strong objections to "paternal- 
ism" in government lead them to look with disfavor upon such super- 
vision. The excellent record of the National banking system certainly 
affords strong argument for Government supervision of banks. This is 
perhaps not the place to discuss the general question; but if the prin- 
ciple of supervision is accepted, as in the writer's opinion it ought to be, 
there is certainly great room for improvement in the laws of most of the 
States in the regulation and supervision of trust companies. Less than 
one-half of them can be said to have satisfactory statutes for the con- 
trol of such institutions. 

On the other hand, it may be said with much truth that great prog- 
ress has been made, and that, considering the short time that trust com- 
panies have been a factor in the financial world, the progress has been 
quite remarkable. It took many years to develop our banking systems 
out of the chaotic conditions of the first half of the nineteenth century. 
Then, too, the attitude of the trust companies themselves promises much 
for rapid advancement in legislation regarding them. The great major- 
ity of the leading companies welcome the placing of greater safeguards 
about the business. In a number of instances legislation designed to 
regulate trust companies has come through the agitation of the subject 
by the trust companies themselves. Many trust companies in States 
where the laws do not require examinations are in the habit of having 
their business thoroughly examined by expert accountants. 



CHAPTER V. 
ORGANIZATION OF THE WORKING FORCE. 

IT is difficult to find two trust companies the scope of whose business is 
exactly the same; and because of this fact, and because these institu- 
tions are still in the formative period, the plans under which the work- 
ing forces of trust companies are organized are nearly as numerous as the 
companies themselves. There is some variety in the titles given to dif- 
ferent officers and employees, and great variety in the duties which such 
officers and employees are called upon to perform. The average trust 
company worker, outside of the banking department, is usually called 
upon to do service of a more varied nature than that of the average 
bank employee. 

The organization of the working force depends, in the first instance, 
upon the character and amount of the company's business. If it is prac- 
tically a bank operating under the name of a trust company, as is often 
the case, its working force will be organized in a manner differing little 
from that of an ordinary bank. Usually in such an institution the com- 
mercial banking and the savings banking are conducted in separate de- 
partments (a segregation which is required by law in some States), the 
former being known as the Banking Department, and the latter as the 
Savings Department, — called in some of the Eastern States the Savings 
Fund Department. 

If trust business is undertaken, a Trust Department is maintained 
for the conduct of such business. If the volume of trust business is 
considerable, this department is usually separated into two divisions, the 
Corporate Trust Department, devoted to the handling of trust business 
for corporations, and the Individual or Estates Trust Department, 
which looks after the administration of estates and other trust business 
for individuals. In the largest companies, these departments are some- 
times further subdivided, as noted hereafter. 

Most trust companies conduct a Safe Deposit Department. Other 
departments often found in the largest companies include the Bond, 
Foreign Exchange, Real Estate, Advertising or Publicity, Audit, Credit, 
Statistical, and Legal Departments. The duties of the various officers 
and employees will be described under the captions of these depart- 
ments; the reader being reminded that in smaller companies the same 
officers and employees may look after the work of two or more of the 
lines of work described. 

Duties of the Various Officers. 

The titles given trust company officials do not necessarily convey 
any idea of their duties. Sometimes the President is not an active of- 
ficer, but devotes to the company's affairs only so much time as is neces- 
sary to preside at directors' meetings, serve on certain committees and 
act in an advisory capacity. The tendency in recent years, however, is 

7 89 



90 TRUST COMPANIES. 

towards making the presidency an active office, in which case the Presi- 
dent is, of course, the active head of the company. In companies in 
which the President is not an active officer, the management devolves 
sometimes upon a Vice-President, sometimes upon the Treasurer, occa- 
sionally upon the Secretary, sometimes upon the Secretary and Treas- 
urer. In the West and South, the active head is frequently called the 
Cashier, as in the case of banks. Where the offices of Secretary and 
Treasurer are not held by the same man, the duties of the Treasurer are 
apt to be connected with the Banking Department, and those of the 
Secretary with the Trust Department; but instances are numerous in 
which no attention is paid to titles in the assignment of the duties of 
the different officers. The titles of such officials as the Trust Officer 
and the Managers of the various departments are, of course, more de- 
scriptive of their duties. A newly-organized company is apt to pay 
more attention to the relationship of titles and duties than an old com- 
pany, where the different men have grown to their titles, their duties be- 
ing well established before the titles are given. In recent years there 
has been a tendency among both banks and trust companies to have a 
number of active Vice-Presidents, each of whom has special duties not 
defined by the title. 

In the largest companies, each of the executive officers is usually in 
general charge of one or more of the departments. Important matters 
and the general policy of the departments and of the institution as a 
whole are usually determined, subject, of course, to the Board of Di- 
rectors or the Executive Committee, by a committee or committees of the 
officers. 

The President, or whatever official is in active charge of the com- 
pany, is the man who is immediately responsible to the directors, and 
through them to the stockholders, for the general conduct of the insti- 
tution. Upon his shoulders rests the general supervision of the affairs 
of the company; to him the lesser officials report, and under his general 
direction they administer the business of their several departments. Ex- 
cept in the small companies, matters of detail are not, as a rule, brought 
to his attention; his strength and time should be reserved for the con- 
sideration and determination of general policies and matters of unusual 
importance. He is, of course, the man upon whom rests the greatest re- 
sponsibility for the safe and profitable investment of the funds of the 
company and of the funds which the company holds in trust. Such in- 
vestments, however, especially those of the trust funds, are not usually 
made upon his sole responsibility, but are determined by an investment 
committee, composed of directors and officers, of which committee he is 
generally the most influential member. Often there are separate invest- 
ment committees for the general funds and for the trust funds ; and in 
the largest companies one or more officers subordinate to the President 
are detailed to give special attention to the matter of investments and 
make recommendations from time to time regarding purchase or sale of 
investments.. The laws of many of the States prescribe the classes of 



ORGANIZATION OF WORKING FORCE. 91 

investments permitted for trust funds, and for the general funds of 
trust companies; and within the limits allowed by law, many companies 
by by-law or resolution of the Board of Directors define the classes of 
investments in which their different funds shall be placed. These limi- 
tations, if wisely made, tend towards safety and lessen the responsi- 
bility of the chief executive of the company. If unwisely made, their 
effect is quite the reverse. 

The duties of officers other than the chief executive vary so much in 
companies of different sizes and of different proportions of banking, 
trust and other departments of business, that it is quite impossible to 
even outline their duties in a way that would represent the practice in 
any considerable number of companies. Their duties will therefore be 
indicated in a general way in the discussion of the various departments. 

Loan Department. 

Ordinarily the loans are handled as a part of the work of the bank- 
ing department, but in the largest companies they are looked after by a 
separate department. The officer in charge, with assistant officers when 
necessary, should be qualified for the work by nature and by study, a 
knowledge of values and good judgment as to risks being essential. He 
usually has some latitude in the making of loans of small amount or 
upon approved collateral or to persons having established lines of credit. 
The selection of collaterals which are to be accepted as security, the es- 
tablishment of lines of credit and the making of loans of large' amount 
are usually attended to by a loaning committee. 

The Loan Clerk has direct charge of the details involved in the 
handling of loans. Through his window he meets the customers whose 
applications for loans have been approved, sees that their notes are 
properly made out, signed, endorsed, etc. ; that they are accompanied by 
the proper collateral, if collateral loans, and that such collateral is cor- 
rectly transferred to the company: and, if mortgage loans, that the 
mortgage is in correct form and accompanied by an abstract of title or 
title insurance policy correctly describing the property and showing 
clear title, and by insurance policies properly assigned, if needed. He 
figures interest, sends notices of and collects same. He receives payments 
on loans, either partial or complete, and endorses same on the notes 01 
cancels and delivers the notes. He keeps records showing all necessary 
information regarding the loans, including the balance on each loan and 
the interest payments. He keeps line cards or records, showing the total 
loaned on each particular collateral, and keeps track of daily quotations 
on stocks and bonds held as collateral, to notify his superior officer if 
same decline in price to an extent that makes them poor security for the 
loans. He receives written applications for loans from those who do not 
see an officer in person regarding same. Sometimes he is given a limited 
amount of discretion in making loans to designated parties within speci- 
fied limits or upon stated collateral. At the close of the day, or at con- 



92 TRUST COMPANIES. 

veirient times during the day, his figures are turned over to the General 
Bookkeeper. In his work he has several assistants; and in some com- 
panies one loan clerk is in charge of collateral loans and another is in 
charge of mortgage loans. 

If the company does a discounting business, a Discount Clerk is in 
charge of the details of such business. He receives paper accepted for 
discount, figures the amount of the discount, makes out credit and debit 
tickets for the bookkeepers, keeps the discount record and line ledger, 
keeps a tickler showing the maturities of the paper discounted, and 
sends such paper through the proper channels for collection at maturity. 
In trust companies whose business is mainly that of commercial banking, 
the amount of discounts is usually large as compared with that of other 
loans, and the Discount Clerk has a number of assistants. 



The Banking Department. 

One officer, with such assistant officers as the volume of business may 
require, has charge of the banking department, aside from the loans. 
Save in the matter of loans, his duties are much the same 
as those of the Cashier of a bank so far as the supervision 
of the practical work is concerned. He sees that the different 
workers in the department perform their work satisfactorily; keeps track 
of the reserve and balances with correspondents; meets customers, over- 
sees the opening of new accounts; adjusts differences; attends to the 
correspondence of the banking department; signs drafts, decides ques- 
tions of signatures, overdrafts, identification, etc., and looks after numer- 
ous other matters that come up daily. This officer, with the assistance 
of the Chief Clerk, is usually charged with the duty of detailing men to 
fill temporary vacancies due to sickness, vacations, etc., both in his own 
and other departments. The banking department is divided into two 
parts, one of which handles commercial accounts, and the other savings 
accounts. 

The Chief Clerk acts as general assistant in the banking department. 
While he has some stated duties, his time is largely occupied in attending 
to special matters assigned to him from time to time. He is a man of 
all-around ability and experience, who can step in to fill any position in 
the department in an emergency. He looks after matters of detail in 
the relations of the different departments one with another. 

The General Bookkeeper keeps the general books of the banking 
department and the records of investments, and also acts as general 
bookkeeper for the whole institution to the extent of recording the earn- 
ings and expenses of the several departments. Aside from these items, 
each department keeps its own books. The General Bookkeeper pre- 
pares the daily statement and reports based on his books, which together 
with the reports of the other departments are laid before the President 
each morning. 



ORGANIZATION OF WORKING FORCE. 93 

The Commercial Receiving Tellers and the Commercial Paying 
Tellers perform the duties usually devolving upon such workers, receiv- 
ing deposits and paying checks for customers, and attending to kindred 
duties. One of the Paying Tellers has charge of the cash, and locks 
and unlocks the safes in which it is kept. The Savings Receiving Tellers 
and the Savings Paying Tellers respectively receive deposits from and 
make payments to the hojders of savings pass-books. 

Progressive trust companies have separate tellers to handle the busi- 
ness of women customers. The duties of these tellers are the same as 
those of the corresponding tellers in the men's department. Some com- 
panies maintain a separate "Women's Department," with an officer in 
charge. 

The Draft Teller attends to the issue, for the use of customers or of 
the company, of drafts on the company's correspondents in New York, 
Chicago and other cities of the United States. If the company does 
not maintain a separate foreign exchange department, he sometimes also 
issues foreign drafts and traveller's checks. 

The Collection Teller receives items for collection, keeps record and 
tickler for such items, and sends them through the proper channels for 
collection. In some cases he makes local collections direct, and has a 
force of collectors for that purpose; but more frequently trust compa- 
nies being, as a rule, non-members of the clearing-houses, collect items 
through National or State banks. 

The New Accounts Teller is in charge of the detail work of opening 
accounts for new customers. His work requires tact and good judg- 
ment, especially in cases where such new customers are not introduced 
by an officer, but come direct to him. He takes the depositor's signa- 
ture, issues a pass-book, check-book, etc., and when necessary gives in- 
structions for their use. In companies which deal much with foreigners 
or with persons of slight education, he should be provided with an equip- 
ment for taking finger prints in lieu of signatures, as means of identi- 
fication. 

In companies having a large number of accounts, pass-books which 
have been left to be written up or for the entry of interest, and monthly 
statements of account when such accounts are rendered in lieu of writing 
up pass-books, are kept in a separate cage, with a Pass-book Clerk in 
charge. This is a convenience both to customers and to tellers. 

Every large company should have one or more Utility Clerks. They 
are men of all-around ability and experience, who can take the place of 
a teller, bookkeeper or other employee in case of accident, sickness or 
rush of work, and during vacation periods. 

The Individual Bookkeepers keep the accounts of customers in the 
commercial department, and the Savings Bookkeepers the accounts of 
customers in the savings department. 

The Clearance Clerks have charge of items for the clearing-house, 
which they collect from the various tellers, arrange according to the 



94 TRUST COMPANIES. 

banks on which they are drawn, and take to the clearing-house. They 
also bring and assist in looking over the incoming clearing. 

The remaining employees in this department are Stenographers; 
Messengers, who carry money and securities to and from the bank, to 
express offices and elsewhere; Office Boys, who run errands, file letters 
and attend to various duties assigned to them. The Janitor and the 
Porters, though having to do with the whole institution, are most natu- 
rally classed with this department. The Porters stand at the doors to 
direct customers to the proper offices or windows, keep a watchful eye on 
persons passing in and out of the bank, and are on hand for any service 
demanded of them. Frequently the same persons act as Porters and as 
Messengers. 

The Work of the Trust Department. 

The trust department — which is semi-legal in the character of its 
work, and which is the department of specialties — is divided into two 
sub-departments, one of which devotes its attention to trust work involv- 
ing the affairs of corporations, while the other is engaged in the hand- 
ling of estates and probate business. Some companies make three de- 
partments by putting the work of transfer agent and registrar into the 
hands of a separate department; and in rare instances an exceptional 
volume of business causes the maintenance of separate departments for 
reorganizations, payment of coupons, etc. 

One officer has charge of the corporations division of the trust 
department. If not a lawyer, he must at least have thorough 
familiarity with so much of commercial law as concerns his work, and 
he freely consults the company's attorney as occasion arises. There is 
great variety in the work of this department, and the duties to be at- 
tended to on one da}?- or week may be of a character quite different from 
those of the succeeding day or week. Now they are the details attendant 
upon acting as trustee under a bond issue; the next task may be that of 
acting as assignee for a large concern, mercantile, manufacturing, bank- 
ing or other ; again they may concern the re-financing plans of a corpora- 
tion, the handling of a bond pool or syndicate, the collection of assess- 
ments, or the distribution of proceeds, acting as depositary under escrow 
agreements, the duties of a receiver, acting as depositary for a sinking 
fund, depositary of stocks under voting trust agreements, the payment 
of coupons, the transfer and registering of stocks or the registering of 
bonds, and so on. The general direction of these and similar matters 
rests upon the officer in charge of the department. He has the assist- 
ance of one or more assistant officers, according to the amount of busi- 
ness handled. 

The Chief Clerk of the department acts as general assistant to the 
officers, and is in charge of the working force. He keeps the depart- 
ment tickler, figures assessments and distributions with the assistance of 
the other clerks, and personally superintends important details. If the 



ORGANIZATION OF WORKING FORCE. 95 

volume of business is large, he has a force of general clerks, whose du- 
ties depend upon the work in hand. 

The Transfer Clerks attend to the transfer and registering of stock 
certificates, and the registering of bonds, keep the records of same, fur- 
nish certified lists of stockholders and attend to such other matters as 
occasion demands. 

The Coupon Clerk pays coupons as they mature and are presented, 
cancels and arranges and keeps a record of them, and returns them with 
statements at regular intervals to the companies concerned. Sometimes 
he has charge of all incoming and outgoing registered mail and express 
matter for the whole institution except the banking department, attend- 
ing to valuation and insurance on outgoing matter and keeping a record 
of same. He has as many assistants as the business demands. 

The Trust Bookkeepers keep the records of the department and look 
after such special duties as are assigned to them. 

One or more of the stenographers of this department operates a book 
typewriter, with which he makes entries, dictated to him by the officer 
in charge, upon the trust register and other records. 

One officer — perhaps the Trust Officer, with assistant officers — has 
charge of that division of the trust department which handles estates 
and probate business. Like the officer in charge of the other division of 
the trust department, he needs to be familiar with the law as it concerns 
the work of his department. He confers with customers who wish to 
leave property in trust with the company, or to appoint the company 
agent or attorney-in-fact, or to name it executor or trustee under will, or 
trustee under agreements relating to life insurance, or who wish to em- 
ploy the company to act for them in any capacity. His advice is sought 
and freely given to customers on various matters of semi-legal character 
regarding their estates. He has general charge of the estates in the 
keeping of the company, looking after them as he would after his own 
property. He confers with heirs and beneficiaries under trusts held by 
the company. It is largely through this department that the trust com- 
pany develops that peculiar personal character that distinguishes it from 
the proverbial "soulless corporation." As guardian of the estates of 
minors and others, and in other capacities, the officer in charge of this 
department is often called upon to perform duties that bring him into 
close personal touch with customers. 

It is a part of the duty of this officer to see that trust funds in the 
department are kept invested in ways that are safe and as profitable as 
safety will permit. Such investments are made upon the advice, either 
of a committee existing for the special purpose, or of the executive or 
finance committee of the company. 

In some companies the Trust Officer is in charge of the whole trust 
department, the subdivisions of such department being under the charge 
of assistant trust officers. 



96 TRUST COMPANIES. 

The Chief Clerk of the department superintends the working force, 
keeps the department tickler and looks after more or less of the im- 
portant detail work. He sees to it that income of the various trusts is 
remitted to beneficiaries as received or at stated intervals, that coupons 
and interest and other income is collected when due, and that statements 
to courts, beneficiaries and others are duly rendered. 

The Bookkeepers of the department keep the books, in which a sep- 
arate set is kept for each trust, as well as general figures showing the 
work of the entire department. 

For the care of the productive real property in its keeping, this de- 
partment needs a number of Collectors, who look after the collection of 
rents, making of repairs, renting to new tenants, etc. In some instances 
the amount of such business is large enough to call for the establish- 
ment of a separate rental department. 

The number of reports rendered, as well as the volume of corre- 
spondence, requires a number of stenographers in this department. 

The Safe Deposit Department. 

This department is under the charge of a Manager, — sometimes 
called the Safe Deposit Officer. His duties involve the general super- 
vision of the department, in which he often has the help of an assistant 
manager, and he usually devotes considerable time to the development of 
new business and to seeing that his department is kept up to the times. The 
Assistant Manager has charge of setting the time clocks and closing and 
opening the vaults, makes out the daily reports and assists in waiting on 
customers. 

The Bookkeeper keeps the records of the departments, sends out 
bills for rentals and performs miscellaneous duties. He keeps records 
of all visits made by customers to vaults or boxes. 

A Guard admits customers to the department, keeps his eyes open 
and gives general assistance. In many companies packages are called 
for and delivered on request by automobile, in which case an extra Guard 
and Chauffeur is needed. 

The Bond Department. 

This department is sometimes in charge of a Manager, whose duties 
involve the investigation, purchase and sale of municipal and other high- 
grade bonds, the department conducting practically the same business as 
a first-class bond house. The department has a natural connection with 
the investment buying of the company, and sometimes the officer in 
charge of the Bond Department acts as chief adviser of the investment 
committees. 

The Salesmen of the department, under the charge of a Sales Man- 
ager, are engaged in selling securities. 

The Foreign Exchange Department. 

This department, under the charge of a Manager, ranges in its func- 
tions in different companies from the mere sale of foreign drafts, trav- 



ORGANIZATION OF WORKING FORCE. 97 

ellers' checks and letters of credit issued by regular dealers, to a large 
business in the purchase and sale of foreign bills of exchange, notes, 
bankers' checks, letters of credit, acceptances, etc., involving the main- 
tenance of its own foreign correspondents and the issue of its own 
drafts upon such correspondents. The number of clerks and tellers, and 
their respective duties depend upon the volume of business. 

The Real Estate Department. 

The Manager of the Real Estate Department conducts for the com- 
pany a general real estate agency business. His duties are similar to 
those of an ordinary high-grade real estate agent, being the purchase and 
sale of real estate and the renting of same, acting as agent in the hand- 
ling of real property, the collection of rents, etc. In a large department 
he has one or more Assistant Managers, and a force of Salesmen, to- 
gether with Stenographers, and usually one or more Chauffeurs for auto- 
mobiles with which to show property to prospective customers. 

The Advertising or Publicity Department. 

The Manager of this department, as his name indicates, is in charge 
of the company's advertising. The growth of the idea that banks, and 
particularly trust companies, may with dignity advertise and "hustle" 
for business, has been phenomenal, and has already reached the point 
wher^ these institutions are among the leading advertisers. Accordingly, 
the Advertising Manager of a progressive company has an important 
mission to perform, and must be a man of experience in his line, of ideas 
and of industry in the pursuit of new and attractive ways of drawing 
public attention to his company. In his work he has the assistance of a 
number of clerks and stenographers who prepare and maintain advertis- 
ing lists and send out advertising matter. 

The Legal Department. 

The number of legal and semi-legal questions which arise daily in the 
work of a trust company requires constant reference to lawyers. In 
some cases the need is supplied by the retention of a firm of attorneys 
under annual retainer. In other cases an Office Attorney is employed in 
addition to the retaining of a law firm. Many companies, however, now 
maintain a regular legal department, the head of which is called the 
Counsel or Attorney. He has one or more assistants, and looks after all 
of the legal documents handled by the company, in addition to giving 
legal advice when called upon. 

The Statistical Department. 

Some companies maintain a Statistical Department, under the charge 
of a Manager, who is engaged in the gathering, tabulation and analyzing 
of information regarding securities. He has one or more assistants, in- 
cluding a Stenographer. Trust companies handle a large volume of 



98 TRUST COMPANIES. 

stocks and bonds, including those owned as investments of the company, 
those held for estates in the trust department, and those offered as col- 
lateral for loans. The files of this department contain all of the infor- 
mation which can be gathered regarding such securities, and this infor- 
mation is tabulated, studied, "boiled down" and analyzed by the Statis- 
tician to show the underlying values. The department is in close touch 
with the loan, trust, investment and bond departments, and is sometimes 
conducted as a part of the last-named deparment. 

The Credit Department. 

Companies which conduct a general commercial banking business 
sometimes maintain a Credit Department, in charge of a Manager or 
other officer, who is engaged in gathering and studying credit informa- 
tion regarding the company's borrowers. The work of the department is 
the same as that of similar departments in banks. In case the com- 
pany's business is such as to require work of this kind and also that of 
the Statistical Department just described, the two departments are com- 
bined. 

The Audit Department. 

There is a growing recognition on the part of the best managed com- 
panies of the importance of providing for the thorough audit of the com- 
pany's business. This is effected sometimes bj 7- the regular employment 
of firms of public accountants, and sometimes by the maintenance of an 
Audit Department. In the latter case, the officer in charge is known 
as the Auditor. With a force of assistants he is engaged in auditing the 
work of the various officers and employees and in perfecting the ac- 
counting system of the company. He should be employed by the Board 
of Directors and should make his reports direct to them. 

General Employees. 

In addition to the employees named above, a large company has need 
of a number of employees whose duties are less definitely connected with 
any one of the departments. In addition to the Stenographers assigned 
to specific departments, there are usually a number whose duties are not 
so assigned. The same thing is true of Office Boys and Messengers. 

The Supply Clerk is in charge of the various supplies, books and 
stationery needed by the employees and officers of the company. His 
duty is to see that a sufficient supply of each article is always on hand, 
which requires, of course, a careful system of keeping track of the 
amounts of the different articles on hand. Supplies are distributed to 
the different workers on requisitions initialed by the officer who acts as 
Purchasing Agent, by whom also orders for supplies are placed as their 
need is reported to him by the Supply Clerk. In a large company the 
value of the supplies handled by this clerk in a year amounts to several 
thousand dollars. 



ORGANIZATION OF WORKING FORCE. 99 

The Expense Clerk is in charge of the records showing the distribu- 
tion of the expenses of the company. He also is in charge of the ex- 
pense vouchers, which he fills out from the bills and mails to the payees 
after they have been examined and signed by the Purchasing Agent. 

Progressive companies have an Information Clerk, usually a woman, 
who is stationed in the lobby to give information to customers. 

The Mailing Clerks are charged with the duty of seeing that all out- 
going mail is in proper shape; that each letter is signed and is enclosed 
in the proper envelope correctly addressed, sealed, stamped and placed 
in the postoffice. 

Other employees whose duties are sufficiently described by the titles 
are the Telephone Operators, Dictograph or Telautograph or Pneumatic 
Tube Operators, Elevator Men, Porters, Guards, Night Watchmen and 
Janitors. 



CHAPTER VI. 
FORMS AND RECORDS FOR THE TRUST DEPARTMENT. 

IT is a trite but eminently correct remark to make regarding the books 
and records of any financial institution, that they ought to be as sim- 
ple, clear and accurate as skill and experience can make them. The 
remark applies with special force to the books and records of the trust 
company, and especially to those of its trust department. Here is need of 
special care, because of the fiduciary nature of the business, because of the 
necessity of using the records as the basis of frequent reports to the 
beneficiaries of the various trusts and to the courts, because the history 
of business handled in trust for others ought to be complete and self- 
explanatory. 

The wise trust department manager will therefore see to it that 
provision is made at the start for books and records that shall approach 
the golden mean between the two extremes of too great fullness of detail 
and the unnecessary labor and time required thereby, and of too little 
fullness and detail, resulting either in fatal omission of facts that may 
be of the utmost importance, or in the waste of much labor and time in 
the work of supplying the omitted information. 

To attain to such an ideal set of books requires large experience and 
careful study, together with a liberal endowment of "common sense." 
The records will be inadequate if they do not contain a complete history 
of all the essential matters pertaining to the trust; they will be cumber- 
some and unwieldy if they contain more than such necessary information. 
Yet it is safer to err on the side of too great fullness, if one must err at 
all, and it is better for the forms for the records to contain blank spaces 
for details which the intelligent bookkeeper may omit at his discretion in 
©articular cases, than to make no provision to suggest such details to the 
careless, lazy or incompetent worker. 

The matter of simplicity and clearness is of the greatest importance 
from many standpoints. The books ought to be simple enough to be un- 
derstood by any officer or intelligent employee of the company, without 
the necessity of special experience or explanation. This has been learned 
by costly experience in many institutions. The writer knows of one case 
in which a company had a set of books so complex that the man who reg- 
ularly kept them was the only one in the company, officers included, who 
could interpret them without much study. When he was out for lunch or 
away for the day, it was necessary to await his return to ascertain the 
simplest facts regarding those accounts. The books were devised by an 
expert accountant, were perfect from the theoretical standpoint, and were 
beautifully arranged by the printer, but they required an expert to 
translate them, and were soon discarded. Similar experiences have been 
100 



FORMS FOR TRUST DEPARTMENT. 101 

met with by many companies, and there is a distinct trend towards sim- 
plicity by the older institutions. 

Another consideration is that the bookkeeper on any particular set of 
books may at any time meet with accident or sickness which may occasion 
his long absence or death: and it is obviously important that another man 
be able to take his place without the necessity of a long course of train- 
ing, or the making of numerous errors in starting the new work. 

Where it can be afforded, it is of decided advantage to have the books 
specially prepared with printed headings for the various columns and 
spaces. To the man who works on the books daily, these headings may 
seem unnecessary; he knows what the various spaces are for without the 
labels. But it is not enough to have the books understood by the man 
who keeps them; they must be readily understandable by any intelligent 
person, so that the officers may know the state of things at a glance, and 
so that a new man may take up the work at any time. This proposition 
seems clear enough on its face, yet it is astonishing how little it is heeded 
by some institutions. 

Because of the frequent reports required, it is of great advantage to 
have the records in such form that the stenographer may copy them on 
the typewriter just as they stand. This precaution saves a great amount 
of work and many errors. 

There should be a general system of accounting, of which each book 
and record is a part, and through all of them should run a chain of en- 
tries that binds them together. This insures accuracy and prevents mani- 
pulation. The source of each entry should be readily ascertainable. 

Some companies, especially where loose-leaf books are used, consider 
it of advantage to have all leaves of the same size, thus insuring uniform- 
ity in the sizes of all the books and records. This adds much tc neatness 
and general appearance, and is often of convenience. If this is done, the 
size should be large enough for those records which need considerable 
space. This requires making some records larger than necessary, but the 
fault is not a bad one. The size used by one of the best companies is 
15% inches high by 13"% inches wide. This makes a book of convenient 
shape and size. 

Use of Loose-Leaf Books and Cards. 

The question of the use of loose-leaf books and records is one on 
which opinions differ, and the opinions for and against their use are often 
quite emphatic. That they are convenient is generally conceded. The 
essential objection urged against them is the ease with which leaves may 
be removed, and the records be changed or the leaves be lost. This objec- 
tion is largely removed by the plan of having the keys to the books in 
the sole charge of one official or trusted clerk, who is held responsible for 
any irregularities due to removal of leaves. Where there is objection to 
the general use of loose-leaf records, they may be used only on ledgers 
and other secondary books, the books of original entry being bound in the 



102 TRUST COMPANIES. 

usual way. It argues much for the convenience and safety of the system 
that few cases are on record where a company has discarded loose-leaf 
books after having given them a trial. 

The use of card records is open to much the same objections as the 
loose-leaf book, and its advantages are of the same kind, but more pro- 
nounced where adapted to the needs. The use of cards for various pur- 
poses is steadily growing, and in many institutions has entirely displaced 
books in some departments. 

Of course the cash and securities should not be in the keeping of the 
ones who keep the records concerning them. Audits should be made at 
frequent and irregular intervals, and the cash and securities on hand 
must then agree with the amounts called for on the books kept by an- 
other. 

However complete and carefully arranged the set of books may be, 
the matter of accuracy and care in their keeping depends upon the men 
who do the work day by day. The books of the trust department ought 
never, even for a day, to be in the charge of novices or incompetents. 
The best bookkeepers in the institution ought to be in charge of these 
books. They ought to be well paid and well treated. This is done in most 
of the best-managed institutions. In others there seems to be a lack of 
appreciation of the importance of such work. The writer knows of an in- 
stance in the metropolis of the country where an unusually competent 
and painstaking manager of the book-keeping department was informed 
that, as his department added nothing to the earnings of the company, its 
expenses must be kept down to the lowest possible figure! The shallow- 
ness of such an argument is obvious enough. 

The number and kinds of books needed by the trust department de- 
pend upon the size of the company and the character of its business. 
Trust business necessarily accumulates slowly and usually requires years 
to reach considerable proportions. The greater part of the business of 
the average trust company, especially of the small and the new ones, is 
in the banking department, and what* trust records are necessary may 
often be kept in the general ledger. In the following pages will be given 
descriptions of the books, records and forms required by companies doing 
considerable trust business. Many of these are not needed at all by the 
smaller companies, and often two or more of them may be combined in 
one book. There is such variety of business done by different companies 
that it is quite impossible to devise sets of books applicable to all, and 
each company is under the necessity of devising books suited to its in- 
dividual needs. To what extent it is desirable to discount the future in a 
new company, and to provide at once sets of books in anticipation of a 
large and diversified trust business, will necessarily depend upon the in- 
dividual prospects of the company. 

Relation of the Trust Books to the General Books. 

It is usual for the trust department (or departments) to keep separate 
records of its own work. For its cash it keeps an account with the bank- 



FORMS FOR TRUST DEPARTMENT. 



103 



ing department just as any customer would; and some companies keep 
bank accounts for some of their trust funds with other trust companies or 
banks. Only the totals of such accounts appear on the general or in- 
dividual books of the company. For example, if at any time the trust de- 
partment has on hand $300,000 in cash, accumulated or awaiting invest- 
ment, such sum appears on the books of the banking department as a de- 
posit to the credit of the trust department. Regarding the details of this 
deposit the banking department has no more to do than with the details 
of the deposit of any customer. 

The Trust Register. 

When a new trust is taken, on by the company, the first book in which 
record needs to be made is the trust register or register of trusts. The 
purpose of this book is to give a list of the trusts held by the company, 
together with a concise history of each trust, its conditions, etc. Some com- 
panies use two or more books for this purpose, keeping trusts received 









REGISTER OF TRUSTS. 














TRUSTS CLOSED 




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through the probate court in one book, and other trusts in another 
book. Considerable discussion on the wisdom of this course was brought 
out at the meeting of the Trust Company Section of the American Bank- 
ers' Association at Milwaukee in 1901. 70 The best usage seems to be to 
have but one trust register in which are kept records of all trusts, from 
whatever source. 

In 1900 a committee was appointed by the Trust Company Section of 
the American Bankers' Association to print a book of trust company 
forms. In Fig. 1 is given the register of trusts recommended by this com- 
mittee, with sample entries. When a trust is received, memorandum of 
same is at once made on this register, and the trust is given the next 
consecutive number. By this number it is thereafter known, and its 
papers and securities are filed under that number. This is not only a 
great convenience when the number of trusts becomes large, but is a 
decided safeguard in filing documents. It becomes of special importance. 



TO Proceedings Trust Company Section American Bankers' Association, 1901 
pp. 22-27. 



104 TRUST COMPANIES. 

too, when more than one trust is held from the same party. The numbers 
also show the order in which the trusts were received and the total number 
received up to any given date. It does not show the number of open 
trusts, as many may be closed. 

In Fig. 1 the first column is for the number of the trust. The second 
column is for the date when the trust was opened. Care should be ex- 
ercised here — and in all books — to have the year, as well as the month 
and day, correctly and plainly indicated. After the book has been in use 
for a term of years, this becomes of the utmost importance. Young book- 
keepers frequently overlook this. 

The next column, headed "name," is for the name in which the trust 
stands. 

The next column, headed "character of trust," describes briefly the 
capacity in which the company is to act, or the general nature of the work 
undertaken by it. 

The next column, headed "source of appointment," shows whether the 
trust was received by appointment of court, by private agreement, or 
otherwise. 

These are all the entries that can be made at the time that the trust is 
received. In cases where an inventory, an appraisement and a proof of 
publication are required, the dates when these were attended to are in- 
serted in the proper columns. When a trust is closed, entries are made in 
the next columns showing the date when closed, and the authority for 
such closing. 

It is a convenience to have a special file, called the "disposed of file," 
for trusts which are closed, so that the live trusts can be kept separate. 
The last section of Fig. 1, headed "trusts closed," is for use in connection 
with this file. At a convenient time, the remaining papers of closed trusts 
are placed in boxes or envelopes in this file, the package is given a num- 
ber, which is inserted in the last column in the register, and the number 
of the trust and the date of closing are inserted in the columns shown. 
Some companies do not give new numbers to closed trusts, but file same 
by the original number, which is probably the better plan. 

There should be an alphabetical index to the register of trusts, giving 
the number of each trust and, if desired, the page on the register in which 
it is entered. The regular size of page for this register is 21 by 15^ 
inches. 

It will be seen that this register permits of only a meagre record of 
the facts regarding each trust. It serves as a convenient means of keep- 
ing a list of trusts and of learning at a glance the proper number to give 
to each new trust. But fuller details regarding the trusts must be 
written out elsewhere. Some companies have such details on a specially 
printed page inserted in the loose-leaf trust ledger at the beginning of 
the account of each trust. 

Many companies dispense with the use of this form of trust register 
entirely, and register all trusts in a book devised on quite a different 



FORMS FOR TRUST DEPARTMENT. 



105 



plan. In the book, one page (or more, if necessary) is given to each 
trust, the facts regarding the trust being treated at greater or less length, 
as the case in hand may require. The trusts are given the proper con- 
secutive numbers as received, the same as in the brief form of register. 
The pages are either ruled across like an ordinary record book for writ- 
ing, or are entirely blank if they are to be filled in with a book-typewriter. 
The book may be specially printed, but unless loose leaves are used it 
will not be of advantage to have much printing, as the record needed for 
different classes of trusts varies greatly. In any event the matter to go 
in the trust register should either be dictated by an officer or inserted by 
an intelligent clerk who is thoroughly familiar with the work. 

Fig. 2 shows a page for such a register. The history of the trust 
may be continued on the other side. The page is quadrille-ruled, as a 
convenience in tabulating items when necessary. It's size is 11x15 inches. 



. The Pearl Street Savings and Trust Company. 



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111 



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HISTORY 




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ii> 



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Ftg. c 2. — Page of Trust Register. 



If the trust business is large, the best plan is to use a loose-leaf trust 
register, with pages specially printed for different classes of trusts that 
are common, and blank pages for others. As each trust is received, the 
proper kind of page is inserted, and the next consecutive number is given 
to the trust. 

Figs. 3 and 4 show two different pages for such use; and the page 
shown in Fig. 2 may be so utilized. 

Fig. S gives the front page of a leaf used by a large company for 
the registering of trust deeds. This company uses a book typewriter, 



106 



TRUST COMPANIES. 



TITLE jjjj, smithville Sleetrio Traction Conrpsuy. 

MEMORANDA 



TRUST DEED TRUST NO. 216 
. TOTAL ISSUE i 300 , 000. 00 



sneer no., i from 7/s/02 to 



antti nu,. J. rm« ■ f / 6/11% - * v 

RECEIVED July s, 1902. ACCEPTED BY EXEC COM. July 2, 1902. APPROVED BY TRUST COM. June 15, 1902. 
. FOLI 



COMP.J30Q.OO 



LAWS OF 



AS TO CtlATTEl 



BONDS PROVIDED FOR 



BONOS PAYABLE 



INTEREST PAYABLE 
RATE S % 



DESCRIPTION OF 
PROPERTY 



IN CASE OP DEFAULT 
TRUSTEE MAY 



IN CASE OF DEFAULT 
BONDHOLDERS HAY 



Mew Jersey 

MORTGAGE J^y 1 1902 

aTT smithville. 



EXECUTION July 1, 1902. 60NDS July j^ 13Q? ^ 

DATE July 1, 1902. 



county and state Sussex, New Jersey. 



300 



BONDS. NOS. 



COUNTY AND STATE SU886I, New Jersey, 



to 300 inclusive. »i oo.00 " CN 



D * TE July 1,1902. 
June 20, 1903. 

300,000.00 



IN New York 0N July 1, 1922, AI Blank Trust Co. 
IN New York 0N Jan. 1 & July 1. * T Blank Trust Co. 



Franohlse. Nine and one-fourth mi i es of track, wires, eto. Power 
house and eight aores 6f land, oor. 8th Ave. and 17th St., and e- 
quipment on sane. Car barns and equipment and five acres of land, 
cor. 12th Ave. and 53rd St. 107 cars with motors, etc. Sundry 
property per description in deed. All looated in Sussex Co., N.J. 

$30,000. on Power house and adjaoent buildings. $40,000. on e- 
quipment. $15,000. on barns and contents. 



$14300.00 down and same amount on July 1 of each year to 1921 in- 
clusive, to be paid in trust to the Blank Trust Co. 



Sell property. See trust deed. 



Three-fourths in interest may demand action on part of trustee. See 
trust deed. 



Fig. 3. 



374 



with which the entries are made, as shown in the figure. The abbrevia- 
tion "Comp." at the upper left-hand corner refers to the compensation 
received by the company for its services. Most of the entries are self- 
explanatory. It will be noticed that the memoranda opposite the head- 
ings, "in case of default trustee may" and "in case of default bondhold- 
ers may" are not extended. The utility of extended memoranda on such 
points is doubtful. If action is to be taken in these matters, such action 



FORMS FOR TRUST DEPARTMENT. 107 



TITLE 



<S 



CJ xXoux^w C^r-trt^-Yv-^ 



SHEET Ay / FKonifyen To^lojoxl 



TH^ Til-n IV K T-ftUST COMTANY 



Souvc* of Afl.po u-nt-meTvi CPtTrft-aAS" CfW-onCt" 



leV^N"-^! 



3a.t«. Opc-n«d Tl^U/vTj /foo 



|(VVff/VT»1tY *~ LrD 



m zmo-RPirivq 



fVoptrt., i-nTrU.it 



Be-»efici*)-4<-5 



Hi Sto-r y 



1, e?oo. 



MOOO.'S ^o ,^rL /fc<x^. <A- g£ cry^JUL^ -#row^_ Q&yQ-jC Cry^ "7 y -C^-i>-<sL T§ L-^jZu^Jtr 
(jJi^ruXj-A JL^a^cJIm. (VKi«iv^l *Ke ~fc&JJUL 




'3 



UJ L£aU_c^-v^. (J£rn-v'Y\_ 






(XMwA. of all, Jn^«4n^, Tl M 
*'XcrtrO-0'? A*JLo-JL AcrrJU,^ OJj^ Of (R < rzi^dxAj i 01, V. 



TT^UST CL0SFID <fy£ io, ifoz. 



Fig. 4. 



should be put in the hands of the attorney of the company, and he will 
not be content with less than a study of the trust deed itself. Especially 
will this be true if there is any question regarding the interpretation of 
the instrument. It is a safe rule never to put into the trust register any 
memoranda regarding whose correctness there might be the least question. 
The blank space is much more useful than such a memorandum, and 
capable of less damage. 

On the reverse side of the leaf the record is continued with the fol- 
lowing headings: "In case of sale/' "liability of trustee/' "sale or ex- 
change/" "delivery of bonds." 



108 TRUST COMPANIES. 

Fig. 4 shows a page adapted to record of trusts received through the 
probate court. The first part calls for the same information as in Fig. 1. 
Under the "list of property in trust/' need be given such property only 
as is not itemized on the trust ledger. Some companies put into the 
ledger only the cash in the trust; others add the securities at the ap- 
praised value and some at the face value, and some include all the prop- 
erty in the trust, items of uncertain or doubtful value being listed at the 
nominal appraisal of one dollar. The last plan is a safeguard against 
overlooking any item of the trust property. If this plan is followed the 
list of property in the register may be omitted. 

Under the head of "memoranda" are entered any special remarks re- 
garding the terms of the trust, matters to be attended to and, if desired, 
the names of the beneficiaries, regular remittances, etc. The best usage, 
however, is to enter the latter memoranda on a page preceding the ac- 
count in the trust ledger, as will be described later. Indeed, some com- 
panies register their trusts only on pages (like that shown in Fig. 2, or 
blank pages) which are inserted in the trust ledger, thus keeping all 
memoranda regarding each trust in one place. In such cases a numerical 
index to trusts must be kept in a separate book. 

Under "history" should be given a complete record of all essential 
matters in the administration of the trust down to the time of its final 
disposition. The careful keeping of this record is of great convenience 
and importance. It should contain such matters as important conferences 
with the makers or beneficiaries of the trust, changes in the written agree- 
ment, death of interested parties, etc. When necessary the history should 
be continued on the reverse side of the leaf. 

For the registering of trusts for which neither of these forms is 
adapted, blank pages should be used, the entries to be dictated by the 
trust officer or other experienced person. It is convenient to have these 
blank pages ruled as in Fig. 2 or Fig. 4. A convenient size for these 
pages for use in a loose-leaf binder is 15% by 13% inches. 

Fig. 5 gives the first page and an outline of the other pages of the 
form used by another large company, on a somewhat different plan. This 
form is made of card-board, size 5V± by lO 1 /^ inches, containing eight 
pages and no cover. 

At the top of the second page is the heading "terms of the trust and 
powers of trustee." The third page is divided into three equal parts, 
with the headings shown in Fig. 5. The fourth page is headed "history," 
and this is to be continued as far as necessary on the remaining five 
pages. These forms are arranged in numerical order in specially pre- 
pared files, which contain only the live trusts, the forms being removed 
to a transfer file as each trust is closed and its record completed. This 
plan is convenient in that when one wishes to consult the record of a given 
trust he may remove the form from the file, and have the record in com- 
pact and convenient shape without the handling of a large book, and 
without interfering with the work on other trusts. It requires care lest a 



FORMS FOR TRUST DEPARTMENT. 



109 



[Page 1] 



ESTATE OP., V«A> 



TkE UnionTrust Company. 






APPOINTED. 






TRUST CREATED BT. 



(^j^AJULcas.- 



.kiM_._<^..i2>!lwutl. 



TRUST TERMINATES J-ll&lS.M^-&£j. 



ACCOUNT MOST BE FIXED -JtSbJLzCM 



1\x&\qJ^ 



COMPENS ATION ^SuusCT~.2SK 
LEDGER NO— 3-TJ 



o^y^M^tt 



£ ATTORNEY. 



[Page 2] 

TERMS OF THE TRUST AND POW- 
ERS OP TRUSTEE 



[Page 3] 

BENEFICIARIES AND THEIR IN- 
TERESTS 



PROPERTY, WHEN AND FROM 
WHAT SOURCE RECEEVED 



EXECUTORY INTERESTS AND EX- 
PECTANCIES 



[Page 4] 
HISTORY 



Fig. 5. 



a record be lost or misplaced. Where such records are used, it is a good 
plan to have printed forms of receipts, one of which the person taking 
the form signs and puts in the place from which the form is removed, 
thus showing who is responsible for that particular document until it is 
replaced. 

Some companies use a probate settlement docket, the standard form 
of which is shown in Fig. 6. The headings and sample entries are self- 
explanatory. This book is indexed for months, and thus serves as a 
tickler to show settlements due each month on this particular class of 
trusts. All probate trusts are here entered, so that the book contains a 
complete record of settlements of such trusts. 



110 



TRUST COMPANIES. 



The use of this docket is of course unnecessary if the large form of 
trust register is adopted, and a suitable general trust tickler used; as all 
the information here contained, and more, is easily recorded on the 
register. It is of advantage where, for any reason, it is deemed im- 
portant to keep such memoranda regarding probate trusts separate from 
those of trusts received from other sources. 

It should be said that there is great difference in the ways in which 
various companies use their trust registers. Some make the memoranda 
exceedingly brief, depending upon reference to the papers in the trust at 
frequent intervals. Others have lengthy entries made, even copying wills 
and other documents in full. In favor of this practice it is urged that 
many trusts, especially as trustee under wills, may last for twenty or 
thirty years, during which time the documents may become misplaced or 
worn by constant usage. In case of the loss of the original paper the 
verbatim copy becomes invaluable. 





PROLATE 


§£TTO,EKillRlT ©©SKET. 












NUME^TJeivefic^-SK . 


3>»TE «f 
ATPO//YTAI£«T 


NATirRE 
thus r 


Court yvo. 


THllSTHi. 


Settle™ «nt 
Due. 


PINAL SETTLSVEHT 
■ n L. E D 


DlSCHAUffeU 


*n,o{. ($) CuAsu^ysY^ 


'U/s^v,, <&oj^x*ji.~ Ln-f*./ 


Wj Ifcl 




31*41 


1 


'lad 3, iicff 


"Ttfff^ <fj Iqn* 


TVLcA //-, 190 f 




QfLo.P<R.(Bua~^~ &r^ 



















































































































































































Fig. 6. 



Journals and Ledgers. 

The book of original entry for all transactions in the Trust Depart- 
ment involving cash is the General Journal of the Trust Department. 
This book is really, in its main usage, simply a cash-book; but usage 
differs in the matter of arranging the debits and credits as for a cash- 
book or as for a journal. The ordinary journal form suffices for the 
work, and for small companies is not only cheaper than specially-ruled 
books, but is also quite as convenient. Most of the larger companies, 
however, use specially-ruled books; the chief purpose of the rulings, 
aside from the matter of appearance, being to separate different classes 
of accounts. Figure 7 represents a Trust Journal, or rather Cash-Book, 
arranged with separate columns for the accounts of "Bond Trusts," of 
"Court Trusts" and of "Sundry Trusts." The company which uses this 
book conducts all its trust work through one department, but maintains 
three trust ledgers — one containing the accounts of bond trusts (i. e., 
trusts in which the company acts as trustee under bond mortgages, in- 
volving the payment of coupons and of bonds when due), another con- 
taining the accounts of court trusts (i. e., trusts received by appointment 
of court), and the third containing the accounts of all other trusts for 



FORMS FOR TRUST DEPARTMENT. 



Ill 



The Guardian Savings and Trust Company. Trust Department. 

• Debit Cash Received.- ALfat^Oz /f 9^. 



V 



i x b -m e 



WJxJxA&hL AilhjikdpxtruAj- f^LUuiJXUjjs^J 3 - a^jLL 
WjJ[. foiJHOu- I -To. o 

\ 1 3 ^zo^X i>f '/'/b sib *l'/«r 7 >r •• 

J Ob J/mJalIa^ fctdJjL 

\JAWBTAXJL~ , 

JjJufaM 'Mu fote^CnjJ ■ Mzxr&. g lr(or ti ? * 

AghJA; (J 

Mooo "° fuAs <ldl J&&1, 

Koitbr*- /hxu,<dd loo 

loAuAjtrLuJ 



aoi 



tie 



I fqf> 



^33 J 



tc 



"\loc 



Fig. 7. — Left-Hand Page of General Trust Journal or Cash-Book. 

which cash is handled. It will be seen that the arrangement of this 
cash-book makes convenient the posting of the items to the three ledgers, 
inasmuch as a glance down any column shows what items are to be posted 
to the ledger in hand. 

The three small columns at the left of each page are for posting 
marks. The first of these columns, headed "Special Accounts/' is for 
use with those items that must be sub-posted to any other than the regular 
ledger accounts, such as rents, items for the Loan Register, etc. In the 
ledger a complete set of books is kept for each trust, just as the owner 



The Guardian Savings and Trust Company. 

Credit Cash Pato_ 



Trust Department. 



>sr 



y 



y 



J 



vT-WPT 



ITEMS 



ml 



Njf /?XuuT 3 ,r to 

. fitfdlUJjlU*. I 1 1,3 >l 

J fi PjuiUUWV • fit- ■■ 33 

efi.Jufa, 



liSto «"<!o-T™u C~»T, 



qj- 



nS 



fofVI 



V'J'o 



b o 

3TJ/0 

7 L 



7V1 



3J- 



■/■!'■ 



Fig. 7. — Right-Hand Page of General Trust Journal or Cash-Booic. 



112 TRUST COMPANIES. 

of the trust might keep them for himself. Each item in the general 
cash book therefore appears in the individual ledger of its proper trust 
as both a debit and a credit. The columns in Figure 7 headed "Individ- 
ual — Dr. — Cr." are for the marks of postings to these accounts. In the 
figure the entries are numbered for convenience in describing the entries: 
these numbers would not appear, of course, in the regular use of the 
cash-book. Thus, in the left page of Figure 7, entry No. 1 would be 
posted first as a debit to the cash account of the Smithville Bond Pool, 
and a check mark made in the Dr. posting column. It would then be 
posted to the credit of Syndicate Subscriptions account of the Smithville 
Bond Pool, and a check mark made in the Cr. posting column. Of the 
remaining entries on the left page, the debits would all be made to the 
cash accounts of the several trusts. The credits would be made as fol- 
lows: Entry No. 2, to the Income account of the trust concerned; 
entry No. 3, to income; entry No. 4 to the Bonds account, and if the 
bonds are sold at a profit, the excess over the cost would be posted to 
the credit of the Profit on Bonds account; entry No. 5, to the Coupons 
account and to the Bonds account. In entry No. 2, the items would be 
sub-posted to the rent ledger under the account for each piece of prop- 
erty, and the check marks of the postings placed in the Special Accounts 
posting column. In entry No. 8, the interest on the mortgage would be 
sub-posted to the Loan Register, under the account for this mortgage. 

In the right-hand page of Fig. 7 ' , the credits for all the entries would 
be made to the cash accounts of the several trusts. The debits would 
be made as follows: Entry No. 1, to Coupon account of the trust in- 
volved; entry No. 2, to the account of Mary Trowbridge, if remittances 
are regularly made to her; or, if remittances are not regularly made, to 
the Expense account; entry No. 3, to S. S. Smith, Syndicate Manager; 
entry No. 4, to Expense and Repairs accounts, respectively; entry No. 5, 
to Repairs and O. R. Gates accounts, respectively. The Repairs items in 
entries Nos. 4 and 5 would be sub-posted to the Rent ledger under the 
accounts of the properties involved., a separate account being kept of 
the expenses and repairs on each piece of property. It will be noted 
that a voucher is kept for each item of expense, the vouchers for each 
trust being numbered consecutively. 

With this journal, as already stated, ledgers are used in which a com- 
plete set of "double entry" books is kept for each trust. The ledgers, 
which are preferably loose-leaf books, are indexed by tabs on the edges 
of the leaves, and after the tab index for each trust are inserted as many 
ledger leaves as may be required. The number of accounts carried for 
each trust depends, of course, upon the character of the trust. It may 
require the carrying of only Cash and one other account, such as Prin- 
cipal or Income. It may be necessary to add to these such accounts as 
Bonds, Stocks, Mortgages, Real Estate, Individuals, etc. Under this 
plan the cash account will of course contain a memorandum of every 
cash transaction affecting the trust, and it therefore serves as the basis 



FORMS FOR TRUST DEPARTMENT. 



113 



for rendering statements of account either to the court or to beneficiaries 
or to the maker of the trust. Some companies call this account the Bank 
account rather than the Cash account.. 

For these ledger pages any of the forms shown hereafter may be used. 
If only one form be used, as is practicable, though not entirely convenient, 
that shown in Figure 16 is probably the most useful, being adapted to 
different kinds of accounts, and containing columns for both debit and 
credit balances. 

Inasmuch as the character of the business done in trust work for court 
trusts differs considerably from that done for corporation trusts and 
others, many companies, as already stated, divide the trust work into two 
divisions, and use different styles of records in the two divisions. Figure 
8 represents a journal form used in the corporations division of the trust 



H-i 



lis 



tff-5 ■ 






*/oo,ooo. At^ja @ fa 



/6 oijb-v/~L<JiXpvi« 






Su^iLilb <&r~L<P»+l 









J.<X..S«~JX& 



*i+roo. JL^Ja @ S ' 



GCumd &A£o **>£A, -' 



y\ De-pos Us l^nti-.,! A«if. 



(is-J.11 



Fig. 8. — Journal for the Corporations Division, Trust Department. 



department. The general arrangement of the page is one which is 
coming to be used extensively for various purposes both in trust and 
banking departments. Both debit and credit items are brought on to 
the same page; and the space for names and descriptions being in the 
center, the writing of the names of accounts is often avoided in cases 
where there are both debits and credits to be made to the same account. 
It also causes the name of each account to stand out prominently on the 
page. The object of the extra column headed "General Accounts" is to 
facilitate the separation of accounts which for any reason are to be 
treated differently from the regular deposit accounts, or of accounts 
which are carried in a separate ledger. For example, the total funds of 
the department are carried as Bank account, which is of course a general 
account made up of the cash balances of all the accounts in the depart- 
ment. These funds are carried by some companies in their banking de- 



114 TRUST COMPANIES. 

partments, and by some are carried in other trust companies or banks. 
As shown in the figure, the total of disbursements for the day is credited 
to Bank in the General Accounts column; and the receipts are debited to 
Bank either at the close of the day or at convenient times during the day 
as deposits of the funds are made. Among other general accounts would 
be the interest account for interest received on the Bank account, Bonds 
and Stock account, if the total of these items be carried in a separate 
account, etc. The company from whom the writer got this form carries 
all coupon accounts in a separate ledger, and therefore enters items for 
coupon accounts in the General Accounts column in the journal. The 
second entry in Figure 8 — that of the credit to "Auburn and Birmingham 
Traction Pool" — illustrates a use of the two columns. The bonds having 
been purchased at 80, are carried at that figure in the general Bonds 
account. The sale here recorded having been at 86, the profit of $240 
is journalized in the Deposits column, while the amount at which the 
four bonds are carried — $3,200 — is entered in the General Accounts 
column. 

The next-to-the-last entry in Figure 8 illustrates a time and labor 
saving plan that is much used. A dividend of $48,955 is paid, the 
amount being divided between perhaps one or two hundred persons. Only 
the total is entered in the journal; while the items, taken from the stubs 
of the department's check-book, are entered in detail in the ledger. In 
case of a large number of credit items to the same account on the same 
day, a similar plan is followed, the details being posted directly to the 
ledger from the credit tickets. This plan subtracts nothing from the 
completeness of the record, while it saves about half the labor otherwise 
necessary. 

It will be noted that although this book is practically a cash book, 
is is not, like the form shown in Figure 7, arranged in cash-book style. 
This matter is largely a question of personal taste, but the usage is in 
favor of using the journal rather than the cash-book style, the credits ap- 
pearing on the right and the debits on the left, as in Figure 8. 

The ledger for this department is preferably a loose-leaf book. There 
is so much variety in the nature of the accounts that must be kept that 
it is a decided convenience to have special rulings for the different kinds 
of accounts; and this cannot be done easily unless loose leaves, to be in- 
serted as needed, are used. The leaves must be large enough to accom- 
modate accounts requiring much space. A convenient size is about fifteen 
and one-quarter inches deep and eleven inches wide for the rulings, with 
such added width as is needed for the style of binder used. Figures 9, 
10, 11, 12 and 16 show several ledger forms that have been found useful. 

Figure 9 shows a form adapted to accounts in which funds are col- 
lected in installments or on "calls," or in which payments are to be made 
in several dividends, or in which either receipts or disbursements are to 
be classified. The figure illustrates the use of the form for an account in- 
volving the collection of funds on several calls. From this record it is 



FORMS FOR TRUST DEPARTMENT. 



115 



easy to ascertain at any moment the totals paid in on each call, the per- 
sons who have made payments on each, and the balance of the account. 
In a similar manner, where the form is used to record the payment of 
funds in several dividends, it easily shows any information regarding 
the account that is apt to be wanted. For ordinary dividend accounts, 
however, the use of Form 10 is better, inasmuch as the whole dividend 
is usually paid on the same day, and the complete account may therefore 
be at once placed on a page by itself. K Where funds are to be disbursed, 
and a separate account is wanted of items paid on account of principal, 
interest, commission, expense, etc., this form is well adapted to the needs. 
Because of the various uses to which the form may be put, the several 
columns have no printed headings; but it is customary to have rubber 
stamps for the headings most used. 



TITLE 



.<3/L^.J^^^^ 



LEDGER JRUST NO. 



nJL 



hekoranda jbrsfrAsyj^ r . 3-flJ, C^.<LouJU(J**Jl&-^<>U„ 



d a-rla-ojr-A. 



loo 



Aoo 

£~oo 

so 

■Soo 



loo 
ioo 



SHEET N(V I Z_ ... fROM rfl°fof ...TO ^W»?* 



^■SOO 2.3 



loo 

SOO 
IS 

loo 
Xoo 

•30O 
^So 

loo 
loo 
so 

I OOO 



^Jf»o*S 



l^s^ste' 



Fig. 9. — Ledger Sheet for Assessments and Distributions. 



Figure 10 shows a ledger form adapted to accounts where not much 
room for description of items is needed. The record is kept in a very 
compact shape. The figure illustrates its use for dividend accounts. If 
the number of items be large, the account is continued on the right half 
of the page, shown blank in the figure, and on the other side of the leaf, 
which is ruled in the same way. If the number of items be small, two 
dividends may be recorded on each page. This is a convenient form to 
use for coupon accounts, unless a special form like that shown in Figure 
12 is used. The small columns headed by check-marks V in this form 
are for use in case the work is to be checked over in a hunt for an error 



116 



TRUST COMPANIES. 



or for any other purpose. The use of the column for such check-marks 
leaves the page in neater shape than do check-marks placed indiscrimin- 
ately, besides being a clearer guide. 

In Figure 11 is shown a ledger page which is convenient where the 
items are to be described at length. The descriptions of debit and of 
credit items may be separated by the device explained in connection with 
Figure 14. 

tEDGER TRUST Ho. T^f < t 



TITLE. 



Lvig/Xv^t.^ I , ^O *ftY 




(X <ft ^.M>-u?y\^ 






XooO 

HOO 

loo 
ioc 
Xoo 
■Soo 

(oOO 
I 000 
XOO 

Xoo 
XOO 
tf£>0 

/ooo 

1000 

/•s~o 

loo 



j-/iso 



Fig. 10. — Ledger Sheet foe General Use. 



LEDGE* TRUST NO. 




Fig. 11. — Ledger Sheet with Wide Description Column. 



In Figure 12 is shown a form which combines a ledger page for 
coupon accounts and a record of coupons paid. The combining of the 
two is a great time saver, and the arrangement for noting the bond num- 
bers of coupons paid is very convenient. In the first debit to the account 
— that for the pa}^ment of coupons presented by John Doe — record of 
the bond numbers 137, 138 and 139 is made in the description column in 
the ledger part of the page, and check-marks (V) are made in the proper 
spaces in the form for bond numbers of coupons paid. In the fourth 
debit, the First National Bank of Chicago has presented twenty-five 



FORMS FOR TRUST DEPARTMENT. 



117 



■»•»* fS'JST t 


n2<?<?? 








BONO NUMSr. 
BON 


?S OF COUPONS 1 
feSfi.— DUE..' 


>AID. 

331_ 


SHEET SO.../ FROM ../? <f 7.?-'5--.-TO 


DS NO. .../...._. TC 


D 


WE jcoSSS« DEBiT 


CREDIT | BALANCE C/ 




1-99 100-199 






.f 5-S vw«itfcvTv«. ^5 /f^*f t^fWHr^A-i j 




R.<?<?7o 


Vxfqno 






1 2 


34 5 [0 7 


9 [j 12 3 4 


5 6 7 8 9 




/ 







LL^-L 








; >s">ir-~VN. A*-^ /iV;i3*,)3^ 3 


30 

60 

7-ro 

360 
>f4?0 
360 


10 






lit 1 


-.TTTjT- 










20 


1 


, 


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T 


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coupons returneq..Y>1q£... 


$ 







. " " * — ~ — 

. ■* - , $ _ 







Fig. 12. — Combined Coupon Ledger and Recobd Sheet. 



coupons cut from bonds whose numbers are not consecutive. To list all 
these numbers separately would require considerable time, and then the 
record would not be as clear as that obtained by the device here used. 
The letter "a" is used to designate the coupons covered by this entry. 
This letter is then placed in each of the little squares showing the bond 
numbers of such coupons— %. e., 44, 45, 123, 124, 125, 126, 232, 412, 413, 
414, etc. The next party presenting a bunch of coupons whose bond 
numbers are not consecutive is given the letter "b," the next "c," and so 
on. As is evident from a study of the figure, this device shows easily and 



118 TRUST COMPANIES. 

quickly what coupons have been paid, and who has presented any par- 
ticular coupon. In case the ledger space on the page is exhausted before 
the form for bond numbers of coupons paid is filled, the use of the latter 
is continued, only the ledger space of the next page being used. It is 
more apt to happen, however, that several pages will have to be used for 
the bond numbers of coupons paid before the ledger space of one page is 
filled. If more than 999 bonds are outstanding from which coupons are 
to be presented, of course two or more pages will have to be used for re- 
cording the bond numbers of the paid coupons. 

The use of these various ledger forms suggests again the very great 
convenience of the loose-leaf system. Under this system, whenever an ac- 
count calls for the use of any one of these forms or of any other form 
which may be suggested by the needs of the case, such form may easily 
be inserted in the ledger and the records be kept in the clearest and most 
convenient manner. The system is adaptable to any need that may arise. 
This is not true of the bound book ; for while a number of different forms 
may be bound under the same cover, it is impossible to foresee just how 
many pages of each kind of form will be needed; and it is impossible to 
group them in the most convenient manner for a series of accounts. 
Moreover, at any time a new kind of account may be received which, for 
the greatest clearness and convenience, will require a kind of record dif- 
ferent from any in the book. In such a case, if the loose-leaf system is 
used, all that is necessary is to have the printer prepare the new form, 
and insert it in the binder. Furthermore, under the loose-leaf system 
there need be carried in the ledger only such pages as are needed, while 
in a bound book there are certain to be many unused pages, and the num- 
ber of such unused pages is sure to be increased as the number of differ- 
ent forms is increased. When all of the pages of a certain form are used, 
the book must be filed away with many pages of the other forms unused. 
This takes space in the vault and adds to the expense. 

Journals and Ledgers for the Estates Department. 

In the Estates Department, especially if the amount of business is 
large, it is convenient, if not essential, to have record forms prepared 
especially for the kind of work handled. There is much variety in the 
forms used by different companies; and it is of course true that a com- 
pany doing only a small business in this line will find convenient the use 
of forms somewhat different from those required by larger companies. 
The chief points of excellence to be desired in a system for keeping ac- 
counts of this character are: simplicity and clearness; adaptability to 
both large and small accounts; adaptability to accounts requiring many 
sub-accounts and to those requiring but few sub-accounts; convenient ar- 
rangement for rendering statements to courts or to others directly from 
the books, without the necessity of the stenographer being furnished with 
a separate copy of the account. 



FORMS FOR TRUST DEPARTMENT. 



119 



With all these points and some others in view, the best system of 
books for the Estates Department that the writer has seen is that de- 
scribed in connection with Figures 13, 14, 16 and 18, which was adopted 
by the company using it after experimenting with other forms. This 
system involves the use of a general journal, in which is given in skeleton 
form the total transactions for the day in all trusts; individual journal 
sheets in which the transactions for each trust are entered in detail in 
chronological order; ledger sheets, and memorandum sheets. The loose- 
leaf system is used except for the general journal. 

Figure 13 shows the general journal used in this system. The size of 
each page is 15% inches wide by 14% inches deep. This book serves the 
double purpose of furnishing a resume of the total transactions for the 
day in all the trusts that are active for the day, and of distributing the 
items to their proper places among the general accounts with a minimum 
of labor and yet with accuracy and clearness. Reading from the center 
of the book outward on either page, the headings are: Date, Memoranda, 
Cash, Bank, Income, Principal, Individual, Unimproved Real Estate, 



■200 



GENERAL JOURNAL 



TRUST DEPARTMENT -£STHTU 



■snm 
ossc 



Its 
I sic 






<Hi 



Fig. 13. — Left-Hand Page, General Journal, Estates Department. 



Improved Real Estate, Real Estate Mortgages, Land Contracts, Notes, 
Bonds, Stocks, Total; the headings, with the exception of the first two, 
corresponding to the names of the general accounts carried. This com- 
pany finds it convenient to maintain a separate cash-drawer in this de- 
partment, and hence the columns for both Bank and Cash. Where such 
a cash-drawer is not maintained, the Cash column would of course be un- 
necessary. In one of the columns headed Memoranda are entered simply 
the names of the trusts having transactions during the day, and opposite 
such names, in the proper columns, the debits or credits to the various ac- 
counts under each trust. In the figure, since it is necessary to show the 
form here in two parts, the names are entered in both of the Memoranda 
columns ; but in practice they need be entered but once. 

In Figure 13, the first entry shows that there was received for the 
M. N. Andrews trust, $4,829-30, which is debited to Cash (left-hand 
page). On the right-hand page, $4,500 of this amount is shown credited 
to Principal, and the balance, $329-30, to Income. In the second entry it 
is shown that there has been received for the Estate of M. J. Champion, 



120 



TRUST COMPANIES. 



$7,500, which is debited to Cash (left-hand page), and credited to Im- 
proved Real Estate (right-hand page). Also, for this estate there has 
been expended $250, which is credited to Bank (right-hand page) and 
debited to Income (left-hand page). In the eighth entry it is shown 
that there has been disbursed for the Estate of D. G. Wainright the sum 
of $11,515.75, of which $3,000 is debited to Bonds, $2,000 to Real Es- 
tate Mortgages, $6,350 to Improved Real Estate, and $165.75 to Income. 
The last entry shows that of the funds received during the day, $16,000 
was deposited in the bank. The totals in the total column on either page 
represent the totals of all items on the page except the Cash and Bank 
items. The total shown on the right-hand page agrees with the footing 
of the Cash column on the left-hand page; and that on the left-hand 
page with the footing of the Bank column on the right-hand page. The 
footings of the various columns are carried forward from page to page 
for a week or for any convenient period, and are then posted to the gen- 
eral accounts. 



CfNEflAL JOW*JIU 



TRUST OEPAIJTMENT— ESTATES 



200 



CREDIT 



W 



£d.X.ru^.<R.JW««* 



Fig. 13. — Right-Hand Page, General Journal, Estates Department. 



The day's work being thus summarized in the general journal, the 
work for each trust is entered in detail in the individual journal of the 
trust, the form for which is shown in Figure 14. The credit entries are 
made directly from credit tickets, and the debit entries from the stubs of 
the department check-book. This journal, it will be noted, separates en- 
tries for Income account from those for Principal account, which is a 
convenience not only in posting, but in the rendering of separate state- 
ments of the two accounts. At the left of the space headed Memoranda 
will be noticed the headings Dr. and Cr. This is a device for separating 
the descriptions of debit and credit items, the former being begun next 
to the date line, and the latter under the abbreviation, Cr. This enables 
the eye to quickly pick out the descriptions of the two classes of items. 

In Figure 15 is shown another journal form somewhat similar to 
this, but arranged in cash-book style, with receipts entered in the left- 
hand column. At the top of the first page in this journal are given 
brief memoranda regarding the trust. Concerning this see the discussion 
in connection with Figure 18. 



FORMS FOR TRUST DEPARTMENT. 



121 



TRUST DEPART»n 



-■ - ■ i 



■ - '.:JX. •'!; ?'.■*. ...: . 

5 

S'iEE' HnJ-2. FROM ■ '/°'f TO 



M e M R A N D i 



PRINCIPAL 






C V 

fix 



'^ 

.4. WiT<'wmj^_ — ., -i 

£\.C<. cOca^i, /"Ka7 o)^, -woCjfi,. 



^ JC/j(. -v*-*— -Wy-*-<' 






7<~ 



S'C 



7^ 



ic 



Ito 



Fig. 14. — Individual Trust Journal, Estates Department. 

From the Individual Journal of each trust the items are of course to 
be posted to the ledger accounts for that trust. These ledger accounts 
may include any or all of those shown in the headings of Figure 13., or 
others not there shown. A loose-leaf binder is used, and the account of 
each trust is indexed by tabs .on the edges of the leaves. After the tab 
index for each trust is placed, first the memorandum sheet shown in Fig- 
ure 18; next the journal sheet (Figure 14), and then ledger pages for as 
many accounts as the trust may require. The form for the ledger pages 
is shown in Figure 16, which illustrates the use of the form for the In- 
come account. The space for description of items is limited, full descrip- 
tion having been given in the journal, and still more detailed description 
of debit items in the vouchers. Space is provided for both debit and 
credit balances, as the form is used for accounts, like securities accounts, 
which have debit balances, as well as for those which have credit bal- 
ances, like Principal and (usually) Income. 



, J mount. $-'.(.. 



The Security Trust & Safe Deposit Co., Camden, N. J. 




Fig. 15. — Individual Trust Journal, Estates Department. 



122 



TRUST COMPANIES. 



TRUST DEPARTMENT— ESTATES 



9. 



y~isu<20—wUls 



(J-££-0-u^svd 



laXEI-TRUST H- I 3 



O- 



dA^ 



MEMOBAND/ 






OjWT w£ />y}#-£wfcv. VvCtRU 



/ 00 

/oo 
loo 



7iS 



X 



04 



2-S]0>l 
*6 






/o 



^03 
36<? 

H-T9 
S'S^io 



ISO 
■ills ?C 






CP« 



S. VJ *^* v v*A. 



£W* 






Fig. 16. — Ledger Page, Estates Department. 

In Figure 17 is shown another form for a ledger page for this work, 
having much more room for description of items. 



H^M^*r^_ 



&\ rbskjA^ £~SA_ 



SHEET NO 



A- 






Mti l o I- 



3c 



3 

S-c 



Fig. 17. — Ledger Page, Estates Department. 

Figure 18 represents a memorandum page which is inserted at the 
beginning of the account of each trust. Its object is to place within 
convenient reach of the bookkeeper such facts as he needs for guidance 
in attending to various matters in connection with the trust. It is not 
intended to take the place of the Trust Register, where fuller details are 
given; nor does it take the place of the department tickler, in which are 
made memoranda of all things that will need attention in the future. 
The entries to be made on this sheet will vary with the circumstances of 
the trust and with the personal preferences of the head of the depart- 
ment and of the bookkeeper, for whose convenience it is chiefly designed. 
In Figure 15 have been shown the memoranda used by another company 
for a particular kind of trust. 

As already noted, some companies prefer to keep their Trust Register 
leaves bound in the Trust Ledger, such leaves being inserted at the be- 
ginning of the account of each trust, so that all records pertaining to a 
given trust are kept together. The forms shown in Figures 2 and 4> 
are adapted to such use. 71 



71 See pp. 177 and 179. 



FORMS FOR TRUST DEPARTMENT. 



12; 



JA. 



TRUST DEPARTMENT— ESTATES 



insriDEx: 



TITlF ^li^jU &P>&A.riiM / t(R.\lU&iM4 s 



Oonvins/Co<JU2A>Okrr ^^ Qr-vudjUL Of &U. <^&X^ <>P ^18^* C\. vMt^vmjuO. 



TITLE. -SD< CltwlanS 5ru»t 



DATE OF APPOINTMENT. 



LUa^vuj" x 



-*»ik- 



STATEMENTS TO 



BE RENDERED ,-4-^j J^_ (Sft-IAA^T (f^~C /$<J-vJ~ l L. 



FEES ON PRINCIPAL 



FEES ON INCOME 



■S°/o <~k. Ks^ckM^i ^A*^ t^JL Jt^aAf. 



Oj). 9>vuU tl/ 4- » P I Ho err. Cy,wiiw~JU vr th C^nd^ ^ti. 3.°fe wv crttie-r u^Co-y^l,. 

ABLE U*^ ^triydrv^dt ^a ULtjU , PAYABLE; W3I a ^A.'Hi\ £a_&£- <-i/UaA, , 



INTEREST ON BALANCE 



jtfL 



INTEREST ON OVERDRAFT. 



fct 



: REMITTANCES * IlX) LeUtlL , 0"»V *A )0~^ oP JLeutA. Vuuj-yOC^ /fe' 

MEMORANDA 



Fig. 18. — Memorandum Sheet for Estates Department Ledger. 

Some companies insert at the beginning of the account of each trust 
an inventory sheet, showing the total principal at the time the trust was 
received, and the changes made in same. Figure 19 shows such a sheet 
used by the same company (in New York) that uses the form shown in 
Figure 17. 



■ggg^ggg 




££*jlI 









2 

J/ 



&x*-srC*. 



Y&-U^<u^ v 



H 



I LX 



-yt, 



Fig. 19. — Inventory Sheet, Page 1. 

The inventory shows a balance of $35,450 in Bonds and Mortgages, 
$7,200 in Real Estate, and $44,350 in Securities. The total inventory 
being $89,168.69, the Principal account should show a balance of 
$2,168.69 Cash Principal. Such an inventory ought, of course, to be 



124 



TRUST COMPANIES. 



made somewhere in the records. It may be in such an inventory sheet 
as here shown ; or in the trust register ; or in the regular ledger account 
of the trust, as shown in Figure 22. 

The opinion has already been expressed that the general plan just 
outlined for the handling of estates department accounts is the best one. 
There arc- those, however, who prefer other stjdes of records; and in 



■N'r-y. 



X. J.^1*/. b^-lUTt_ 



7Uo- . 



jh^^ts 









Sa. l ?J& 



p£a 






Z.J.JT.*9 ■€.. ,?„^&«. 









[ i l 



100 ti£ts 4-v«/iW.!tU &AO. Q - in ^»f-i-^ '->--< i*]J~- 
I ° o .. /QiXjU^X. re ► •^i-^-X^t-^,%^ . . - . /Co 

let . Ut^nJt^C lU I . X?j ,^C .. / o [ ': 



Fig. 19. — Inventory: Siieet, 1 age 



fS. 






\ i 



Figures 20 and 21 are shown other styles of ledger sheets, and in Figure 
^2, the combined journal and ledger form given in the Book of Forms 
issued by the Trust Company Section of the American Bankers' Associa- 
tion. In the ledger form shown in Figure 20, provision is made for 
separate accounts of Capital (or Principal) and Income, and balance 
columns for each are provided. The first page under the account of 
each trust in this ledger is a memorandum page, the information called 
for being shown by the following headings: Brief of Terms of Trust, 

Union Trust and Storage Company, 

















c 


ASH 


ACCOUNT 
















CAPITAL 


INCOME 


Date 




De. O. 


B**, 


Dale 


l D ' 


a. 


Uux 












1 1 














1 






i 




■ 





Fig. 20. — Trust Ledger, Estates Department. 



Date of Receipt of Trust, Amount of Commission, Character of Funds 
Received, Income, When to be Paid, Income Payable to, and History. 
The ledger form shown in Figure 21 provides for separate accounts of 
Principal, Income and Trust Investments. It does not have balance 
columns — a serious defect. The obvious objection to these two forms, 
Figures 20 and 21, is that no provision is made for the keeping of more 



FORMS FOR TRUST DEPARTMENT. 



125 



than two or three accounts under each trust; whereas it is usually con- 
venient,, and sometimes imperative, that a number of other accounts, such 
as those shown in the headings of Figure 13, he kept. 

Of quite a different character than any of the ledger forms thus far 
given is that shown in Figure 22, which is both a journal and a ledger. 
It is necessary to show the form here in two parts, the two parts together 





-- 




THE AMERICAN TRUST COMPANY. t ,» s ,n= 




. 


DM 




"£" 




1 ttm3fHm i 


- -. 




'- 




T — 


j **«**, 


n. 














T 








. T 






























1 








il 












! . 








1 


1 | 


| 


























































I 


I 1 i 


1. 






















. 


















-1— 


















1 


1 


1- 


n in 




















' 












' 








1 1 


l 


l 



Fig. 21. — Trust Ledger^ Estates Department. 

representing the open book as it lies before the bookkeeper. This form 
has some distinct advantages and some distinct disadvantages. The ad- 
vantages are most apparent to the bookkeeper who handles the book 
daily and is thoroughly familiar with its every detail; the disadvantages, 
to the officer or other employee who is not familiar with the book from 
daily usage, and wishes to get some information in a hurry when the 
bookkeeper is out for lunch. Combining as it does the journal and 




%v. 



ttiditlti 

(?n*a*jfr. erf *3J3 Ow\/X£k>y. r Cti^~ Gffiprv^J. at 

.. 31 4 / ^.sJJti.&t.,{t**v<h*J).. 
ucfcp. W6~ 

ai.Antik .. ., -. ... 

(ft. §. <&L*.-*Jt 

160 **Uw4 ~3aJ(<. "XU^t^zrQo. •• u 

S^_*^^X^i .iz^i^^aZ- ^TT-tf^Kv^j Ch^~ C*\>^Vv\r2v** •. • • 

<R.S.£fer< n^-^.^JOkfrU, W. . 
OU..tJ.'>!Wwv > e^ i ., '3<?f fiC-roL<2^„, 






Ofr- r< v^j i 






105 



26" M J 
1 (9 

; 



I 

Fig. 22. — Left-Hand Page, Combined Journal and Ledger Estates Department. 



ledger, all posting is done away with, except for such sub-accounts as it 
may seem wise to carry. The record of transactions in all the different 
accounts is kept in chronological order, and in rendering reports the 
stenographer has but to copy the record as it stands. The entries 
for any account may be easily found. On the other hand, the absence 
of balance columns, except for Cash, is a serious objection. The bal- 



126 



TRUST COMPANIES. 



ances may be found by simple subtraction if the footings are always 
up to date; but they are apt not to be so. Another objection to the 
form is the fact that other accounts than those given may be called 
for, and there is no way of keeping them except as sub-accounts. 

Most of the entries shown in the figure are self-explanatory. For 
each item there is both a debit and a credit entry, and the accounts 
as a whole must always be in balance if the work is properly done. 
The check columns for Individuals, for Interest, Rents and other forms 
of Income, and those after the columns headed "Personal Property," 
may be used either for postings to sub-accounts or as a means of pick- 
ing out the entries for the particular classes of items, or for both pur- 
poses. The Principal account shows the total Principal at any time, 



UORTCAGES 



REAL ESTATE 



Pr»soxal Psopeitv 







Fig. 22. — Right-Hand Page, Combined Trust Journal and Ledger, Estates 

Department. 



including both Cash and Investments. The cash Principal may be 
found by subtracting from the balance of the Principal account the total 
of balances under the four accounts preceding; or by subtracting from 
the balance of Cash account the balance of Income account; and it may 
be proved by combining the two operations. Some companies prefer to 
carry only Cash Principal in the Principal account. 

The figure illustrates the plan of entering the complete inventory 
of an estate, at the time the property is received, in the ledger. This 
plan is an excellent safeguard against overlooking any item of the 
estate, as every item credited to Principal in the ledger must be ac- 
counted for. Items of uncertain value may be entered here at the 
nominal appraisal of one dollar, as shown in the figure. Whether this 
plan of entering the whole inventory in the ledger is better than that 



FORMS FOR TRUST DEPARTMENT. 



12' 



DAILY TICKLER. 



TRUST DEPARTMENT. lO iXtajl^ J-C^f, Odhrksr /f y /<fc>V 




MEMORANDA 



vK 



2 



(ft. @>. 






( %^J-4 <K^-fcxA gy 



ATTENDED TO 



4:5 



Sj^^Jl. ^JJaJji'v^jL^JC' 



-hi. if 



S-L<i . /*kf" on»-fl- Cy^r. < ^<,^:fr ^ 



°6^ 



3.-&S 



Tj 



Fig. 23.— Tickler. 

of confining ledger entries strictly to cash transactions and keeping 
the inventory elsewhere, is a matter upon which opinions differ; and 
there is good authority for either course. There is also a difference of 
opinion as to whether securities of various kinds that are included in 
the inventory of an estate ought to be carried at an appraisal based 
on their market value or at their par value. There are arguments for 
and against either course, and the question is not always an easy one to 
decide. 

Sundry Forms for the Corporations Division, Trust Department. 

In addition to the forms for the record of transactions involving 
cash, the trust department has need of numerous other forms and rec- 
ords. Of great importance is the Tickler of this department, upon 
which a memorandum is made of every matter that will require atten- 
tion at any future time. It is not safe to leave wholly t© the memory 
of any individual or individuals the responsibility of attending to any 



!■ i 



l<?Ol 




^Ja V ' U*«u2. (^ &. -u^-fc^TJ 



Fro. 24. — Tickles Card fob General Use. 



128 



TRUST COMPANIES. 



of the details of business so important. Aside from the fact that mem- 
ory is not always reliable, especially when the number of details is 
large, is the fact that the man upon whose memory depends attention 
to any matter may be away or sick or dead when the time comes for 
such attention. The only safe plan is to have a tickler entry made of 
every matter that must be attended to, including those which recur at 
regular intervals. The form of the Tickler is not of prime importance, 
so long as it serves the purpose of a reminder of the business to be 
done at the time it is to be done; but the Tickler entries ought to be 
plain enough to be understood by others than the one who makes the 
entries. 

The responsibility of seeing that the business called for each day 
by the Tickler is attended to should rest upon one man, who will of 
course distribute memoranda to other workers as the circumstances re- 



quire. 



roupoNs nxm 






Number. 



0-3 



Name of Trtis*. 



^9 

^— ' < _ — v- 




A!so Payab.' At 



-7T 



Fig. 25. — Tickler Card. 



For those who prefer a Tickler in book form, that given in the Book 
of Forms issued by the Trust Company Section of the American Bank- 
ers' Association is good. It is shown in Figure 23. The book may be 
either bound or made on the loose-leaf plan. If bound it is made to 
last one year, one leaf for a day, and is indexed for months and days. 
If made on the loose-leaf plan, it may be indexed for years as well 
as for months and days, space for new leaves when needed being found 
by removing dead matter. 

The use of cards instead of books for Ticklers is rapidly growing. 
The cards are placed in a case which fits into a cabinet in the vault, 
and is brought out each morning. It is provided with index cards for 
years, months and days. The case may be provided with a locking 
device to prevent the cards from slipping out accidentally or in the 
event of the case being overturned. 



FORMS FOR TRUST DEPARTMENT. 



129 



The card form of Tickler has many important advantages over the 
book form, among which are these: 

For matters requiring attention at regular intervals (monthly, quar- 
terly, semi-annually, etc.), but one card need be used for each item. 
When the business is adjusted for one period, the card is moved for- 
ward to the next period. Where a book is used, separate entries of the 
memorandum must be made for all of the periods, which in the case 
of a monthly item would mean twelve entries each year for perhaps a 
number of years. If it be urged against the card plan that the clerk 
entrusted with the duty may neglect to forward the card, or may mis- 
place it, it may be urged that he may also neglect to write the memo- 
randum in each of a number of necessary places in a book Tickler, or 
may write it in the wrong place. 



INSURANCE TICKLCi 



NAME 



M^VvxajML OU . Mz.hJi&yw<L 



2>\-X Ou^^yZUj±t &, 



Odt 



fo 



"og 



LOCATION 




^ >th9o, 



PLACED EV 



TflUST NO. 



j±£> 



~\ 



lOSS CLAUSE 





COMPANY 


AMOUNT 






TBM 






BUILDINGS 


CONTENTS 






2IU-M^ 


CTh^cTr^A-K. 


2ST6o 




*S~O0 


* 


Coo 




3 , . - 




















..• 


























i ■ 


















1 












































































J 


- 



















Fig. 26. — Tickler Card. 



Where preliminary attention is to be given a matter some days or 
weeks before final attention is called for, the card is placed under the 
first date, and when attended to is moved to the second date. Thus, 
an item due on the 20th of the month may require notification on the 
6th. 

Where an item of business called for by the Tickler of today is for 
any reason not completed, it is only necessary to move the card forward 
to the next day in the Tickler, instead of writing a new entry in a 
book. 

In trust work, items often need to be "tickled" years in advance. 
This is done easily with a card Tickler, less easily with a loose-leaf 
book; and is practically impossible with a bound book, without a separate 
book for each year, requiring a number of volumes on hand. 

With the card system each item or group of items may have a sepa- 
rate card, which is a great advantage over the book system, where sev- 



130 TRUST COMPANIES. 



Oil/. i TRUST DEPARTMENT , ~ 



CHICAGO 



/HO SH^ S9 ilRecetvefc from >n^-Y^ }jfrv*^ 

fLdr<t^>J^Mi C*KriFiCATB—REP*£ed, N c (^Jf>=Kj^^AAS(L- 



CERTIFICATE REPR 

OF THE 



v^^ cr v ^ f ~' F0R tRANSFSR jqj^kMM ^IUa^^v/ 



TRANSFER TO 

TRANSFER AGENT) 



lw3^r-rrJ NEW CERTIFICATE WILL BE DELIVERED 

ONLY UPON SURRENDER OF THIS RECEIPT. 



©<fch 



Fig. 27. — Receipt for Stock Left for Transfer. 

eral dozen items occur on one page. There is much less liability of 
overlooking any item where each has a separate card than where there 
are a number of items on a page, some of which may be "dead" items. 

The card Tickler is expansive. If a day's work involves need for 
two or three hundred items, the card-case will hold the cards. If a 
day occurs on which but one item is to be ticklerized, but one card need 
be inserted. 

The most obvious objection to the card Tickler is the possibility 
that a card may be lost. The possibility of such a thing can hardly be 
denied; but its danger is often overestimated. The best testimony to 
the safety of the system is the fact that many companies which have 
used the card system for years have found it safe, and are wedded to 
the system. 

In Figure 24 is shown a Tickler card for general use. It has no 
printing — simply lines for writing, as the character of the memoranda 
to be made varies so greatly that printed headings are not useful. 
There are certain classes of items, however, that recur so frequently 
that special forms may be desirable. Figures 25 and 26 illustrate two 
such forms, that shown in Figure 25 being for Coupons Due, and that 
shown in Figure 26 for Insurance Expirations. 

Ibe {[Western IReeerve {Cruet Co, 

"Wo. I £uclti> 2lvenue. 

Grust Department. 

No. 

Rbobived from 




Obrtifioatb 

FOR TflANSPBR. 

Reissue of above stock will be delivered to bearer, or original stock rbtdrnbd, if 
transfer cannot be effected, only on surrender of this receipt. 



Ube TT-*9tern "Rep^-ve ttrust Co. 



Fig. 28. — Receipt for Stock Left for Transfer. 



FORMS FOR TRUST DEPARTMENT. 131 

Forms for the Transfer of Stock. 

When a stock certificate is brought to a transfer agent for transfer, 
a receipt for same is given to the person who brings it. Figures 27> 
28 and 29 show different forms for this receipt. The receipt shown 
in Figure 27 is provided with a stub. In the use of the two others, a 
copy is made by means of a carbon sheet, the copy being taken on 
paper of a different color from the original. These receipts are for 
temporary use only, and are to be surrendered when the new certificate 
is delivered. The new owner of the stock is then to sign the receipt on 

No. 72() DEPOSITED FOR TRANSFER WITH 

Zhc Cleveland Zxmt Co. 




IICLM. 

Shs. P.nmmnn / O O Shs. Preferred 

Stock H OAfl, (Jut Jtfri^VYZLMA^ C %. 

Gbe Cleveland Ztmt Co.. 

„ Qb£z 




$$ 



NOTICE: — Delivery will be made to bearer only upon 
return of this receipt with the attached stub properly 
signed by the depositor 



720 



No. •*~v/ 190 

Received of Zbe Cleveland Crust Co. Shares 

Stock of . 



AS REPRESENTED BY CERTIFICATE. 

No Shs No. Shs. 

No Shs. No. Shs. 

Signed \ 

Add ress , 



Fig. 29. — Receipt for Stock Left foe Transfer. 

the stub of the certificate book. It very often happens, however, that 
the owner does not himself come for the certificate, but sends a mes- 
senger. In such case, the messenger's receipt is taken, and with the 
certificate is sent a receipt to be signed by the owner. Forms for this 
receipt are shown in Figures 30 and 81. It is preferably of small size, 
not over four by two or three inches, as it must be pasted on the stub 
of the certificate book. This transaction is evidently open to the ob- 
jection that the messenger sent for the stock may be irresponsible or 



132 



TRUST COMPANIES. 



not well known to the company which acts as transfer agent, and the 
company may hesitate or refuse to entrust to him the certificates rep- 
resenting great value. The form of receipt shown in Figure 29 is de- 
signed to meet this difficulty. To the receipt from the transfer agent 
is attached a stub containing a receipt which is to be signed by the owner 
of the stock or by some person known to the transfer agent as being 
responsible; and without such signature the new certificate will not be 
delivered. This plan protects the transfer agent and works no incon- 
venience to the owner of the stock. The' receipt shown in Figure 28 



fi&mJL^ta, H 



RECEIVED CERTIFICATE No 



£_-..*£" 



. / ^ I H" REPRESENTING /QCLsHARES 




N2. 




OF THE.CA'PITAL STOCK OF' 



i^C 



drsuftx 



^bu 




g SIGNED— 

♦» 

o 
c 

o ADDRESS 



AU 



mi 



Sbvlif\ 



Fig. 30. — Receipt from Owner of Stock. 



has a good point in the wording at the bottom — "Reissue of above stock 
will be delivered to bearer, or original stock returned if transfer can not 
be effected, only on surrender of this receipt." It sometimes occurs 
that the transfer can not be effected, and in such case it is well that 
the transfer agent should not appear to be committed to the duty of 
making the transfer. 



36owltnQ (Sreen {Trust Co., 

Standard Oil Building, 
26 BROADWAY. 



New York,. 



/ 



vS~ 



19 



or- 



Received from the BOWLING GREEN TRUST COMPANY, the 
following certificate of stock of the tiajdr^ <^ctU, 



No?k /a//f 



in the name of. 



-Jildtfa OiL^ 



.for I && 



Name,_C?S*k^ 



■rr^y 




(hk&O* 



,<k^ 



Address, /f<7 l& &UU~T S£ 



Fig. 31. — Recetpt from Owotr or Stock. 



.shares, 



FORMS FOR TRUST DEPARTMENT. 



133 



The transfer clerk now cancels the certificate handed in for transfer, 
after satisfying himself that the transfer is properly authorized, issues 
a new certificate or certificates, and makes the proper entries on the 
Stock Transfer Book, a common form of which is shown in Figure 32. 
Some companies have this book bound in permanent form with an index 
either in the book or in separate form. Others use the loose-leaf plan, 
which is better, the index being in the shape of tabs on the edges of 
the leaves. The record of transfers for any number of companies — up 
to the capacity of the binder — are thus kept under one cover. But the 
plan is sometimes followed of having a separate Stock Transfer Book 
for the stock of each concern for whom the company acts as transfer 
agent. The general form for the pages in such case does not differ 
materially from that shown in the figure. 

Figure 32 illustrates a customary way of making the transfer en- 
tries. The first entry shows the cancellation of certificate No. 619 for 
fifty shares in the name of John Doe, and the issuance of certificate 









Ql. -COi^Lv^.^c 


,jL^,, Ch.,.~. 
















TRANSFERS OF CAPITAL STOCK 


*"* "''"" °"""-°- '" •;.'■;.' •,,"„• ;•,■ ' ::.. '. :r: ::, "- : /: : "■ ■■ ■•', ■■•'.'- ■ ' ■ '.■' _'.^ 


. cKiiTini' vits srnRF.vm --red 


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it" 




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Fig. 32. — Stock Transfer Book. 



No. 2211 for the same number of shares in the name of Richard Doe. 
The record of the new certificates is entered opposite that of the old one 
cancelled. The second entry shows the cancellation of a certificate for 
100 shares, and the issuance of two new certificates for fifty shares 
each. The third entry shows the cancellation of three certificates for 
a total of 100 shares, and the issuance of one certificate for the 100 
shares. The fourth entry is a little more intricate. Certificates for ten 
and twenty-five shares, respectively, are cancelled; the ten shares and 
twenty of the twenty-five shares are transferred to a new certificate for 
thirty shares. The remaining five shares are added to the twenty-five 
shares of the next certificate cancelled, and issued in a new certificate 
for thirty shares. The effort is to keep the record of certificates issued 
opposite that of the cancelled certificates from which the shares are 
transferred, so that the source of each certificate may be plainly shown. 



134 



TRUST COMPANIES. 



STOCK TRANSFER BOOK. 



Ckktipicat*s 


CERTIFICATES 


Polio 


CertlficaUa. 


No. 


No. 
Certificates. 


No. 
Sb&ret, 


J3>>t 


too 


;<?n 


100 


ns- 



> 


Afc 1 /0 ° iVk™. 


a. 


FOr Value ReCeiVed, the undersigned hereby ass.jjns and 


o 


transfers unto Susan Henderson 


One Hutulred Shares 




of the COMMON STOCK of 




COMPANY, 




of One Hundred Dollars each. 




THOMAS HOWARD. 




zg January, , 

SYDNEY SMITH, . . 

By- \it'y. 



Fig. 33. — Transfer Register. 



The printed heading at the top of the page reads as follows: "The 
undersigned, owners and holders of the stock of the above-mentioned 
company, for value received, do hereby, by our respective attorneys 
duly appointed, respectively assign said shares of such capital stock 
in the manner set forth below." The actual attorney for the transfer 
in each case is the clerk who does the work, and who signs his name in 
the space headed "Attorney for Transfer," opposite the entry of each 
transfer. 

The transfer books used by various companies show some slight 
changes from this form. Some omit the column for the "Date of Old 
Certificate," since such date may be easily found if wanted, by turning 
back in the Register to the place where the issue of the certificate is 
recorded in numerical order. Some omit the column "Date Registered." 
Some add, at the right of the page, a column for the addresses of the 
persons in whose names the new certificates are issued; but it is more 
common to enter these addresses on the stubs of the certificate book, 
whence they are copied into the ledger. There is a difference of opinion 
as to whether the form of assignment at the top of the page, and the 
signature of the clerk who acts as attorney for the transfers, really 
add anything in the way of legal safeguard. 

STOCK REGISTER. 

Stock of tfye VJlAX^rY^S&^Ks^cXiis ^Vpa^^X Amotmloflssae^OCOfiOOr 2 Valat per Shan $/00™ 



CERTIFICATES CANCELLED 



CERTIFICATES REGISTERED 



23tf 



<jH 



Q-6-^-rv- ^>Q^i. 



O Q 11) ixJUo^^ (K . C&nrw-rv 



(R-cAastLC&K, 



<lc.~^ Ou. $^J-tK 



I.Tfel 



HS_3_ 



.S.Q-10 



OfAa^u 0. Sy^£#- 



CLI-S-Q 



ogJbh^s. 



elUAju 




3Q1 



C. <a. Lo^r(j^^±>. 



)<?!(? 



S^^Ln ~, CX. 



QxfctL 



0. S Gqyt/U-Cyu 



lo°H: 



&£. 



IPOS' 



ft 



^U<U^T 



'TiLtvCG^. 



fML^V. GL^y 



aa;^ 



M 7 



ut 



Fig. 34. — Form for the Registering of Stock. 



FORMS FOR TRUST DEPARTMENT. 



135 



Dr. lOnih^'-d 1 . S/wvJlTJC 






,. 


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Q.OO^. ^C7V^< 


0=1° 


33 


19S 

Cr. 


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DATE 


No. 
Trinifer 


No.. 

C.rilficafe 


No. 


DATE 


No. 
fraoafsr 


.No. 
Cirutjcate 


No. 

Sham. 


ISivSol. 


DATE 


No. 
Tranifer 


.No. 

Cartlficato 


■£/ 


PATE 


No. 


No. 
Certrficito 


No. 

Starts 


Cr. B.I. 












rfzojo?, 


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Dr. Hrr-dC 5. ^tru^caJ^t- r.r. 


nr. C*U2>. Sfaie^wrJLs. . Cr. 


/T 


vT 


DATE 


taSb 


No. 
CutWcatt 


No. 
Uvoi 


DATE 


No. 


He, 


No.* 

Shaw* 


Cr. Bal. 


DATE 


No. 


No. 

Ctrtffltal. 


No. 
Share. 


DATE 


lo. 


No. 

Ctriifieato 


No. 

Sharot 


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Fig. 35. — Stojk Ledger. 



In Figure 33 is given a form of stock transfer book which is recom- 
mended over the preceding form by the committee which compiled the 
Book of Forms issued by the Trust Company Section of the American 
Bankers' Association. The book is made with four blanks to a page, 
each form to be numbered, from 1 upward. 

The form used by a Registrar to register transfers of stock is very 
similar to the Stock Transfer Book, as will be seen by an examination 
of Figure 34, which shows a usual form of Register. With the ex- 
ception of the dates of the old certificates (which some companies omit) 
and the signatures of the attorney for transfer, the entries in Figure 
32 are reproduced in Figure 34. In the last column in Figure 34, headed 
"Date of Cancellation," is entered opposite each certificate the date 
when it is cancelled — if it is cancelled. Some Registrars, however, pre- 
fer to keep a stock ledger just as the Transfer Agent does. In such 

199 



DR 




*£-*/ 








CR 








/*/■ c*f A/^i^, jes^r /2a£^^-^J 


DAT* 


To Whom Transferred 


(Meat! 


Tnioltr 
Folio 


Amount U ^ 
Shares 1 DiTE 
,. 1 t-ati 3 


FrOM WhOST, TRANSFERRED 


Brume 


TriBir 
Folio 


Amount 


sfjOJ? 


1 


C-*"*^*- t^-"*7-^-~** 


/ 


s-/ 








rf" 


< 




3-i7 




/ 


/ 






r r 










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(/ 









































































































































Fig. 36. — Stock Ledger. 



136 



TRUST COMPANIES. 



case, the column for "Date of Cancellation" is not needed, and is omitted 
on the Register. The essential function of the Registrar being to see 
that there is no over-issue of stock, it is important that the footings of 
the columns headed "Shares" be well kept up, and that the difference 
between the footings be never greater than the number of shares of 
the stock that should be outstanding. After the full amount of the 
stock has once been issued — as is supposed to be the case in the figure, 



1± 



3H-I& 



IdaJch-r "^. >S-m-.,c ~-~.T 



1 WHOM TRANSFERRED 



TO WHOM TRANSFERRED 






»: 



%a. (W^U^r 



Ifl 



loo 



-ft, 






H-lS- 
H-iq 






X2& 



55 






lol 

H-ilo 



3>T 



04 






'1-3 la 



3vS- 



o-i 



^ 



ll.L 



•x 



K 
i j- 









/oo 
/oo 



& 



z 



Ml 



^ 



2E. 



PH 



Q^VG^W 



Fig. 37. — Stock Ledger. 



50,000 shares being outstanding — over-issue may of course be guarded 
against by the balancing of the debits and credits of each transfer, as 
explained under Figure 32. 

It will be seen that the Stock Transfer Book is of the nature of a 
journal, giving an account of the changes in the ownership of the shares 
of stock. As the Transfer Agent must be in position to know at any 
time the present owners of the stock, and the exact number of shares 



FORMS FOR TRUST DEPARTMENT. 



137 



owned by each, it is necessary to keep a stock ledger, four different 
forms of which are shown in Figures 35, 36, 37 and 38. The forms 
shown in Figures 85 and 36 are used in bound books, each corporation 
having a separate book. That shown in Figure 37 is made on the loose- 
leaf plan. That in Figure 38 is a card ledger form. These forms, all 
of which are in actual use today, illustrate the different methods of 
different companies. Two of the forms provide for information as to 
the person from whom shares are transferred and as to the person to 
whom they are transferred. The other forms leave this information to 
be obtained when wanted from the Stock Transfer Book. Two of the 
forms provide for balance columns, which is a great convenience. In 
the use of the card form, Figure 38, a case is provided for the ledger 
cards of each trust, with index cards, and the accounts of shareholders 



idAME 



(X OM. QbaxK 



TRUST WO 



ML 



ADORES 


s *2)X\ 


^M&^s 


$* &k 


C&uaJU^Jl o 












CERTIFICATES SURRENDERED 


CERTIFICATES ISSUED | 


DATE 




NO. CTF ! SHARES 


DATE 




NO. CTF. 


SHARES 


BALANCE 














JO 


;m- 


oj 




3LI# 


IOC 


too 














/I 


H- 


<?3 




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• 










• 


































































.V. IE I«»I2 W-VQi, 



Fig. 38. — Stock Ledger (Card). 



are thus kept in alphabetical order, a thing which can be done only ap- 
proximately in bound ledgers. Figure 35 provides for four accounts 
on each page; Figure 36 for but one account. Four accounts may be 
carried in Figure 37, ©r the whole page may be used for one or two 
accounts, as circumstances require. In the card form, Figure 38, there 
is of course one account to a card, and a second card may be added 
when needed. The use of the card form is growing rapidly. The book 
form shown in Figure 35 has been widely used in New York and else- 
where. 

In the handling of a trust in which the company acts as trustee 
under a bond issue, the first entries are made, as already stated, in the 
Trust Register, such entries giving an outline of the provisions contained 
in the deed of trust. The next entries that need to be made are in the 



10 



138 



TRUST COMPANIES. 



"IsB.r^V.f MORTGAGE S. 






•©NO REGISTER TRUST 110. .1 Q 

- .. -TOTAL ISSUE %yOOO t Q O \ 

INTEREST PAYABLE TK/cLl vW^ .1"!^ 



MEET «io I 



BONDS RECEIVED 



1 I oil 



i too M 



^ooo ooc 



BONOS RETIRED 



-£•<• 



■4-i'ipr_i 



BONDS DELIVERED 



o* 



i oo i 
ilo. 

Ito. 
Mo. 

«»;. 

'Id 



1 oo 

Ho 00 
"loo 

'looo 



DO 

Oo j> 
I Ooo 



c^u 



AUTNHTICATCD BY 



4* 



'9 ft 

ioe 
l"c 

\ oc 



O 
OPo 

£> e ( o 



pre 

flic ceo 

ioTo 

\i^0 Jo 



Fig. 39. — Bond Register, First Page. 

Tickler — memoranda of interest periods, due dates of the bonds, sinking 
fund payments, date of record of chattel mortgages, if any, and memo- 
randa of miscellaneous provisions to be attended to periodically. When 
the bonds are engraved and duly signed by the proper officers of the 
company issuing them, they are turned over to the trust company which 
acts as trustee, and record of their receipt is then made in the Bond 
Register, a form of which is shown in Figures 39 and 40. At the top 
of the first page (Figure 39) is given certain general information re- 
garding the bond issue. Under the heading "Bonds Received," a record 
is made of the bonds turned over to the trustee. As the bonds are au- 
thenticated by the trustee and delivered on order of the issuing com- 
pany, record of such deliveries is made under the heading "Bonds 
Delivered;" and the last column on the page shows the total number 
of bonds outstanding at any time. When, in the course of time, any of 
the bonds are retired, record is made under the heading "Bonds Re- 
tired," and the amount of bonds retired is deducted from the last bal- 
ance shown in the column headed "Bonds Outstanding." Thus, in 
Figure 39, prior to the retirement of $10,000 bonds on September 1, 
1905, the balance of bonds outstanding is shown to be $1,350,000. 
By the retirement of the $10,000 bonds, the total outstanding is reduced 



UNDER 

T 



lERLYING BONDS Of ...yvX;...^^^ 

le .3M.M\!dtarf5^ title. JyLO^.ry^^.i 

Wv^....«l0RTG16E...i % $.?*A. BONDS. OUE.J^S^.li.l'LQi. .J^?^_ ; JK«TI»8t^..ip...- 



80ND REGISTER TRUST N0.."1C.C'._ 



.T^vv^...«ioRTa»GE..i %b.r^rk. bonds. ouE.'J i V^.ii.l(t<2.i .VACu&-:Mmfttt r ..{t...~*k.<^xaioi. 0UE.S^JL^.!Si.i<U£.. 

.■_M^..!&^%!l^¥*^...mR^df^3S^. TRUSTEE. !iLy„U<V*v<^-.ta^^..^^ _._.TJU»STEE. 

N0S...J T0.W.«..$lC?.M.E»CH. TOTAL ISSUE %k.0..Q...Q.Q.e£" «0»>..JL^..TO^.Q_«l.(lB^EMft TOTAL ISSUE t^G.BX>.tl'T~ 



4\4a/_ n. 



BONDS RETIRED 



BOMBS 
jOUTSTANBMt 



BONDS RETIMED 



frooooc 



Fig. 40. — Bond Register, Second Page. 



'hooo 



FORMS FOR TRUST DEPARTMENT. 



139 



to $1,340,000. This record provides the data from which may be learned 
the serial numbers and denominations of all bonds outstanding at any 
time and of the bonds remaining unauthenticated in the hands of the 
trustee. At the left-hand lower corner of the page (not shown in the 
figure), space is provided for the record of bonds cremated, if any. 
The advisability of cremating (or burning) retired bonds under any 
circumstances is a matter of dispute. If done at all, it is done in the 
presence of officers of the issuing company and of the trustee company, 
nil of whom sign in duplicate a "Cremation Certificate," their signatures 
being duly witnessed. The Cremation Certificate reads as follows: "This 
is to certify that we, the undersigned, have this day, in the presence 
of each othei, destroyed the following-described securities by burning 
the same to ashes, viz." Thereafter follows a detailed description of 
the securities-burned. 

It often happens that there are other bonds underlying a given 
issue of bonds, and in this form of Bond Register the reverse side 

150 

* ' BONDS C KHTlVliill) V V » 



BONDS RECEIVED. 



DATE Certified by NUMBRRS 



*h. 






(Ju*d**4 



/ * 

'CI & 



fee 



CUt-a./ 



/ i 



BONDS DELIVERED 



Coapee* Atuchcd 



ON WH09B ORDER 



TO WDOM DBLIVERBD 






J^l^J" 












Fig. 41. — Bond Register. 



of the leaf, shown in Figure 40, is arranged for the records of the 
underlying bonds, if any. The entries show that at the time of the issue 
of the $2,000,000 bonds of the Inter-Urban Traction Company there 
were outstanding two series of underlying bonds, amounting to $400,000 
and $250,000, respectively. As these underlying bonds are retired, 
record is made in the spaces shown. This book is made on the loose- 
leaf plan. 

Figure 41 shows another form of Bond Register, used by an eastern 
company. The chief difference between this and the form shown in 
Figure 39 is that in this form provision is made for the record of bonds 
certified, in addition to the record of bonds delivered. This form could 
be improved by the addition of a column showing the amount of bonds 
outstanding, although such balance may of course be figured from the 
data given. This form is made up in a permanently bound book, and 
the opposite folio, which has a simple record journal ruling, is used for 
memoranda of bonds retired and of any other matters of importance 



140 



TRUST COMPANIES. 



Uf* 3/X^gL^,- LJrt>r^ (JrZKjJ^ Qjr), tfagtoil , ^/IrlJ^^MLsita^^ tS~*/o ^JJLi^e-rU^L, 



$*ipo-o t ow? 



tf-O Coupon attached to «k* bond off^S?— oaeh, 

Imdsm tu n datod 

Indmiur* t xt aUcd by principal 

Bond* duo $ 



i-f-O Coupon* of $ H^r~ taeh. attached, and 
numberod from ohm to /f-v inelaoive. 



Coupon* payablo (Xf-*« I and Ocf. I 

Principal and interest payable in t}fi-*V CjO-«-^ 
For Sinking Fund provision*, tee page 30 of Mortgage. 

Mortgage recorded in tho County of '0'0^X*-T~ 

City of lAXe^r-rr^/ 



in book of Mortgage* 
M. o'clock 



. at Faf 



%jcu l-Uncao 



%^ 



ItFSCo 

id- 



b~oo OOO 
ioo 000 



do 






/ Tfe SOO 

SOI t% looo 



Fig. 42. — Bond Register with Abstract of Trust Deed. 

affecting the account. The same form may of course be adapted to 
use in a loose-leaf binder. 

Figure 42 shows a form of Bond Register which includes space for 
an abstract of the trust deed under which the bonds are issued. With 

UQ.Q 

BONDS 



OF THE 



?M^. r l(^feK Ca>cs£a< 



<^\. 



COnPANV 



Nos .9>QA^.to...^Qi^....iHclusivt 



Signature O.K..J&.l(}k:.S>x 

SraiOH. jaSLSLjL 

Sumbtr, OJC^.V\,Vt( A .,\>., 

C<rtificote O ^......M.-.^S.! .lS..v.„ 

Count OK (2JC,£,... .,.,.... 

Fig. 43. — Memorandum Card for Packages of Bonds. 

some slight changes in the wording at the left of the page, this is the 
form given in the Book of Forms issued by the Trust Company Section 
of the American Bankers' Association. At the bottom of the page (not 
shown in the figure), provision is made for a record of the names of the 



FORMS FOR TRUST DEPARTMENT. 141 

officers who executed the deed of trust for the mortgagor company and 
for the trust company, and for the date when all bonds are reported 
redeemed. The right half of the page calls for about the same infor- 
mation as that called for in Figure 41. 

Before certifying and delivering bonds, the trust company must of 
course be certain that everything necessary has been attended to. A 
convenient way of handling the work is to have the bonds done up 
in packages, and a card like that shown in Figure 43 attached to each 
package. Before the package is tied up, trusted clerks examine the 
bonds for particular features and certify to their correctness by placing 
their initials on the card as shown in the figure. Thus, "R. M. S." has 
satisfied himself by examination of the bonds that the signature of 
the proper officer of the corporation and the seal of the corporation 
appear on each bond, and that the bonds and coupons are consecutively 
numbered as stated on the card. "A. K. R." has examined the bonds 
and found that the certificate of the trust company as trustee has been 
signed on each bond and that the count of 100 bonds in the package 
is correct. 

"*'** REQUISITION FOR BONDS. 



'Dh^fa^M^mf- 



/ 3^JC TRUST COMPANY OfJJ^^&L. ,♦ Trustee. 

Please authenticate under the IJ2jI„ _ -Mortgage of 

this Com pany. dated„_sSWiL L =±=l_i QO-aSL, LCH>^D _ Bonds 

$}&&0 ( ~--- each, Nos. L to /..0...C2..Q. inclusive, bearing coupon 

due < ^Mj£*L L \^p(fP and subsequent thereto, and deliver the same to the order 

of ^szLsjyLaa^^ 




GO 



Q£&Ez 



^LJLLfLi^d^aiS: 



*=_• 



Fig. 44. — Requisition for Bonds. 

Some companies have a blank Requisition for Bonds, which the cor- 
poration issuing the bonds is expected to fill out and hand to the trust 
company when it desires some of its bonds authenticated and delivered. 
A form for such a requisition is shown in Figure 44. This matter is, 
however, often attended to by letter or even by telephone, and in any 
event, the bonds are of course delivered in accordance with the pro- 
visions of the deed of trust. When the bonds are delivered, the trust 
company takes a receipt for them, in a form like that shown in Figure 
45. 

With reference to the matter of the payee, bonds are either reg- 
istered or coupon bonds. Registered bonds, strictly so-called, are rarely 
issued in this country, except by the National Government. Coupon 
bonds, both principal and interest, are payable to bearer; but provision 
is usually made for the registering of such bonds as to principal or 
interest, or both, at the option of the holder. The trust company, acting 



142 



TRUST COMPANIES. 



190 q~, from the 
Bonds of 



to .,,„-. ?0?:.r? ^ inclusive, duly 



Received, New York, ..... 
BOWLING GREEN TRUST CO., New York, Trustee, ^9....9.. 

%10-^P^^,. each, Nos. ..... / ... 

authenticated by said Trust Company as Trustee, under the _ ..^V^^-LT. ... 
Mortgage of said Company, dated SfuJLoi 1 , '1 T' Coupon No. ' 
ofyk^xy.lj^ftSand subsequent thereto attached. 

$SQO r (H^~ By &^ ^^ 




OvJ 



Fig. 45. — Receipt for Bonds. 



as trustee under bond issues, must therefore keep a Record of Bonds 
Registered, a common form of which is shown in Figure 46. Other 
forms of this record provide a separate column for the address of the 
payee, and some provide a column for the name of the officer of the 
trust company by whom the bonds were registered. If the bonds are 
registered bonds, the bond numbers should appear in the record in 



REGISTERED BONDS OF 



VA 



Trust No 3XQ 



?,|<M 



>m 



H43 <&mM^cu)/ 



n S- 



Fig. 46. — Record of Bonds Registered. 



consecutive order; but if coupon bonds, only a few of which may be 
registered, such order is not important. The book should be made on 
the loose-leaf plan, to avoid waste of space where only a few bonds of 
a given issue are registered. 

Figure 47 represents a card form for a Record of Bonds Registered. 
The cards are kept in a case, an index card for each corporation whose 

•"Ky f , )>f CTV^Z&J REGISTERED AS ToO| 



REGISTERED AS TO^J 1X^/2^0-^- 
0ENOMINAT1ON OF BONDS, $ 



CARO NO. 



iron wmwwrrirftiar — 






BOND NO*. 



-i6NB» RtaiaTfcfttb 



BONO NOS. 



& x<\ os\ U)^ S 



/OO 



9 2*03 OhjUUxOA, 

3 lo oH-, Sir-Ay^ ob-Cr^u 



loo \ fooo 
S~0 Xo oo 
I o oo 



Fig. 47. — Record of Bonds Registered. 



FORMS FOR TRUST DEPARTMENT. 



143 



<S& (LlL.Li^^Q^A^.c i Cu(S>., Tn.stNo.7 3 

(_) Coupon Record) 

Coupon No. •$" «<5^- due Od£ I v '#<>$". Bouds Nos. / tolQOO 



Bond Numbers 

of 

Coupons Paid 



MTt mo 



12 3 4 6 



m 



Q± 



Uu»-e, »,-^r 




UtTUtGL 



i3^: 



'lat^.Aj US. 



(So-^^j-^. 



^£: 



Fig. 48. — Coupon Record. 



bonds are registered being provided. After the index card are inserted 
the individual cards in alphabetical order of the names of the holders. 
This form has the advantage of showing both the transferer and the 
transferee of the bonds. 

In the handling of coupon bonds the trust company is called upon 
to act as agent for the payment of coupons as they mature, and there- 
fore has need of a coupon record, a form of which is shown in Figure 
48. In Figure 12 has been shown a form combining a coupon record 
with a coupon ledger account. As there stated, the combining of the 
two records is a great convenience and time-saver. Many companies, 
however, keep the two records separately. It will be seen that the form 
for the record of bond numbers of coupons paid at the right of Figure 
48 is identical with form at the right of Figure 12, and its use has 
there been explained. It need be added here only that the use of this 
form is a decided protection against forgeries, as it shows at a glance 
whether the coupon from a given-numbered bond has been paid. The 
balance of Figure 48 is self-explanatory. It is not always possible to 
learn the name of the owner of the coupons presented, especially when 
a large number of coupons comes through another bank, but it is of 
advantage when possible. Although coupons are payable to bearer, 



« oL &£f .tlud^^ecJ^^J^.. 



COUPON REOSTEHi 
, ...... v SEMES NO. 



T8UST NO. 72 

WiE '°JLf<K... 



AMOUNT i%$~7. 

..'.ffUfi&.io 



PAID THROUGH 



BOND NUMBERS 



05 



<XioJUjd.(Ztf^ 



Oigsr-^V-JtJU 



!*t<ndt. 



sS" 



ZmS23E£22£2Z: 



LM. 



QJ^ 



cLo 



S . Zol 



{jQ^^Jbur^JU 



lo, 



l^y^rOtv 



is 



Fig. 49. — Coupon Record. 



144 TRUST COMPANIES. 

many companies make an effort to learn the name of the person who 
presents coupons for payment at the counter. 

It is often of great advantage for the trust company to have a 
list, even if not complete, of the holders of the securities. If a refund- 
ing plan is to be carried out, or when under the sinking fund pro- 
visions, the funds held are to be used for the retirement of bonds at 
certain periods, if a list is at hand, the trustee may communicate direct 

TRUST DEPARTMENT. a 

Chicago,-. .QctJZ£ , 90 ^ 

V>\Xg^r- IX rPXisy^ J nx JxZe^ (Si) , yt 



* ml, 



Genti.kmen: — Wc send you herewith . .^-fsS^ ! Coupons, for 



3-.?\P. !__Coupons, for g ^^,-~~ 



cach, amounting to $ O .A. \J.S:.*ZZL.: . .from bonds of your Company, as set forth in receipt 

hereto attached, duly paid and cancelled by us. 

Yoo wil) please. have said receipt properly signed, detached and returned to this Bank. 

Yours truly, 

ILLINOIS TRUST & SAVINGS BANK. 



gfr2,Q0r~ TRUST DEPARTMENT. 

CH1CAQO /-v Jl 

(Jc jr. 3.1 19(1^1 

"KCCCtVCO Of Ir.r.iNois Trust & Savings Hank, the following: 

Z"X.& fnnnnns'No.-^ for $_2>\- _each, for interest d uc_ Js/C£,J_ f . J.$Q*ST. 

on bonds oi^d^.^y^^-Lhr^r^J- Qr&jdj^ (E&^ 

Numbered 'V* , * ^ , ff, I.Q-L&. Zoo <^cL^l^ ) jfitflfc <f7 3 ; <f 2.Q 4 h f7<? ^cL^JiA,^ 

• luly paid and cancelled by s.ii.l Hank CTKj, <Hdb^-t(nO-& ^ U T'^^L^. 4^_ 

By OLj^ l Oj.CR z!te i 9n&A._ 

Fig. 50. — Coupon Enclosure Form and Receipt. 



FORMS FOR TRUST DEPARTMENT. 



145 



with the holders of the bonds, instead of relying upon advertisements. 
If such a list of holders is obtained, however, it must, of course be used 
with extreme care. 

Figure 49 shows another form of Coupon Record, which differs from 
that shown in Figure 48 chiefly in the manner of recording the bond 
numbers of coupons paid. This form shows more clearly the coupons 
presented by each customer, but makes it much more difficult to learn 
whether a given coupon has been presented. 




o: 



pisoHpnon or ooorav 


COUPON DU* 


mg. 


•SSS-" 


a 


motnrr. 


TOTAL 




3.0 1 ib Z60 S»c& 


l6 d 


OS 


7 


loo 


k 


3 


s~o o 












3o'\ l 36i,i\']-iiS ) i^(l | ^q^f■ t iqS■ 


>H, 


os- 1 1 

1 


n 


2^ 




Zoo 












ij-lfefc H-lS^'c^-H-SO fcnfli-*S. 


>ii 


0^ 


n 


7^ 


?^ 


/ 


frlS 


1 










$6\ ibS fro i\d>., •s-frl, Sits, S*f o . 


Mi 


of 


7 


S-3 


2^ 


a 


o y»S 












loof-fe I0<o<\ ^J>. 


% 


os- 


1 


fc^j 


tl« 




frGz 


SD 










MI3. | |lU i lia r l i lli)-3,H4-4' 


"f, 


os 


7 


^ 


«? 




b2 


i~D 










3o1,3o&,3l1-3a.r334, 3<?f ,3?<S" 


♦//. 


OS" 


6 


11 


*T 




2oo 












301^0* 3i<=(- 3aX, 


>°ii 


o* 


o 


9 


2S- 




22*T 




£ 


xoo 







Pfffl ^ (/tVC. 3 .1 IPO'S Jron, tja Bowlinj Green Trurt Co. of New York, the »bore described 



»n Te ?* tin S 



CC Ot^fc 



the «*Jd coopoai hiriaj been pafcj by Bo^JJnj Green Trust Cc out of funis depoiited by thi ComeioT for ttut parpotc 

Fig. 51. — Coupon Enclosure Form and Receipt. 



At convenient intervals, or upon the request of the corporation issu- 
ing the bonds, the coupon clerk returns the paid coupons (which have 
been cancelled as paid). Trust companies usually have a printed form 
for such remittance, consisting of a letter notifying the corporation of 
the remittance, accompanied by a receipt to be returned to the trust 
company. Two such forms, which explain themselves, are shown in 
Figures 50 and 51. The form shown in Figure 51 is of advantage where 
coupons of different denominations or of different numbers are to be 
sent in the same letter, as often happens. 



146 



TRUST COMPANIES. 



A trust company needs some means of keeping record of the fees 
charged to and paid by its customers in the Corporations Division of 
the trust department. In the Estates Division of the trust department, 



NAME 
ADDRESS 



Ika, J/vUvv- iAaJmi^,^ 'Vva^vtyo -x> 



FEE LEDGER 



(TVwljX^-^^i 



TRUST NO, 



10o 



BILL RENDD 



ll 



Oil AM>M1A/1^ tKAj^Lyy^^i Slf, OOP. O OO > J>trv^8 



OlSOKIPTIOf. 



A^q/AA^- 



n 



Ooc 



V^C»V-&A/vi/fa ■\\A^oV dA>l/g ./Wn_; lA-yvA^ry^ -^Q ^w-t^M 



ir 



")0/> 



V9 tioit— .AA^lID 



WM 



oj 3 



7« 



d5 ^vA^-vt^^ ^vi/^v^ fxo^bir^J * 1 v33 / iSo~(B l |n- 1 '), 



-V3 D-O^J NA^c'4 



3? 



Lai 



1 



11 



Ci 



Fig. 52. — Fee Ledger. 



fees are usually charged on the regular accounts. Figure 52 shows a 
form of Fee Ledger. This is a card ledger, the cards being kept in 
a case, arranged alphabetically with index cards. 



INCOMING REGISTERED MAIL AND EXPRESS. 



CONSIGNOR AND ADDRESS 



OPENED BY CMC'S CHARGE TO 



ft.l\t^vr ©o 



\3 



°iut. 






(Be-./: 

V. 3 ^ 



>-Sc.v.l * sec 7 
^vt\<OLa<. Cv 









Fig. 53. — Record of Incoming Mail and Express. 

The record of registered mail and express received by and sent from 
a trust company concerns all departments of the institution; but the 
trust department is so much concerned with the record that it seems 

Registered Mail, and Express. 



CON9GNEE AND ADDRESS 



DESCRIPTION 



CHARCR TO 



L zifos 






»&£ Go 



(K.S.O. 



U.S. 



.">"t. 



&(^ 



l/tr 



W- 



S-.ml 



Fig 54. — Record of Outgoing Registered Mail and Express. 



best to include this form here. Figure 53 shows a form for *:he record 
of incoming packages, and Figure 54 a form for outgoing packages. 
These records are very valuable if not indispensable. 



FORMS FOR TRUST DEPARTMENT. 



147 



j 




! Z3 


6 


!u 




I ill " * 


u s " 


Id • E 


^ 5 

U 

IS i_ 


o 


t~ 5 2- 


H i c " 




< ■**="» 1 . 

0. | 

CO ' 


*- ill 


< T i 
I 4 1 3 


Ul ■» --------- 


e4^ I« 


ulj: 


o JjJ l| a "} ,j 

V Is ' * .45 

.1 ' 1.5-3 5 


V 3 


-«V Ifl 


-J»*i S 


-. . .... 




nS a &" 3 S * 




I- 1 - i 


-J" 3 : r r" 


sS | 1 i "5 V 


&*, s g, j^ 


|1* a ? ^ 


fl! UN e; & 


sis (, s § 


5 . ■■ z § 


s 51 j 


4 - « -S 4 


iz cv ^ 

s § & 

Q 1 } > i 
0= F -k 

1 3 & 






« "•"' v, g 


1? ■! 


R il 


II ! 

* 1 1 



- 
o 

Q 

es 
o 
o 

-• 



50 

d 











j 






1 












1 












e 












5 






1 




LJ 


i 




U 

O ! 
o 






IS 1- « 




u 


i s * ■* 




I 


























11 K C 






I* * 3 












5 il 1 




1 


^ ^ 




1 








I ° r 




' 








I U __ 


















s 

1 






1 { 




u 

00 

u 

u 
2 


j 3 a' 






S ^ 

i J 
1 3. 




. 


j t' 





a 
pi 
o 
o 

a 









CD 



O 

H-l 







"E ' 




il? 




ji 




I • 




I i 




I U 




s'S 




J 




23 *_ 




I 1 . _ _ 








|| S 




5 ■ 




.j 




hi 




e j 








||f 




. w 




Q-. s ' s 




&:«e ::::::: 




o &. . 








P-< | j 




s 




I 




■| 4 




;r_ = Is =i 




I | 




i ' J 




1 3 ,1.1s J 


At Alii 


s u 




Is i< 




iLf "' :_ 




i t ^ 




13- 








J' c 




'.■■-■ 




i i '« 




tit 


- 


\l r< 




h'"J * 




"- t -» - 

5 a - 








! * 




1 r 




! 1 
u 




4n i 

! 

r 








s 

s G 




1 -3 

r 





p 
« 
o 

w 






148 



TRUST COMPANIES. 



Sundry Forms for the Estates Division of the Trust Department. 

For the Tickler of this division of the trust department, the various 
forms already shown 72 are adapted, the card forms being the most con- 
venient. Other cards may easily be added, suited to special needs. Fig- 
ure 55 shows a form that is in use, and is very convenient for tickling 
items of income regularly recurring, and for other uses. The arrange- 
ment for dates at the top of the card saves much time and writing. 
Where an item is to be attended to on the first of each month, for ex- 
ample, the figure 1 is inserted under the name of each month; after the 
item has been attended to for one month, the card is moved forward in 
the tickler case to the next month. 

An important form is the Record of Securities held in the various 
trusts. Figure 56 shows, with some slight changes, the form for this 



Jan 



Feb 



Mar 



Apr 



May June 



July 



Aug 



Sept 



Oct 



Nov 



Dec 



Trust 



InvestmentVrllJL^ 




*«jL* 



InterestLQiv, 






% 



Trust Investment Income. 

Fig. 55. — Tickler Card. 



$- 



&C 



record given in the Book of Forms of the Trust Company Section of the 
American Bankers' Association. One double page, or more if necessary, 
is devoted to the securities of each trust. This book is designed to serve 
as the ledger for the securities account, in the space provided at the 
right-hand side of the form. Certain memoranda are called for at the 
top of the form that are usually included either in the trust register or 
in the memorandum page at the beginning of the account for each trust 
in the Trust Ledger. They are not needed in all of these records, and 
will naturally be omitted here if given elsewhere. The size of the pages 
is 21% by 18 inches. The book is provided with an index at the front; 
or a separate index may be used. 

Many companies keep the Record of Securities in card form. Figures 
57, 58, 59 and 60 show the set of card forms used for this purpose by 



72 Figures 23-26 inclusive. 



FORMS FOR TRUST DEPARTMENT. 



149 



TRUST 



£JUl 



2^^^U^£^^3&^J^S^liMM i 



AA Cn>-T^ 



1 



DATE OF BONDS. 





NTEREST PERIODS 



, 14 oo 



Ml 



DATE OF MATURITY. 



<^ ParVa 



( lU^ ) \gni^ 



__jCbonds 



r9&rv: 



Dale 
Purchase 
HPi£ 

( 2^> 



Carried on Books 



Sold to SrNumber< 



Carried on Booki Profit or Ull 



3.37- 3.*H 



^ 



S~o-o~& 



22i 



;f?6,2 S~Q 



Fig. 57. — Card Record of Securities — Bonds. 



Trus t r A J tKjJ}~. ^><Nn>tXxvuoCX .W6MW^t i 

04 ^ ^(^W^^;^ 6L . Mf 




4i/o^/^^^?, ( 



C OM MON — 
PREFERRED STOCK 



PAYABLE AT 



inL_ 



Oat* 

Porchat'd 


No. of Shares 
Certificates In Each 


Par Value 


Cost 


Carried on Books 


Date Sold 


Sold to & Numbers 


Price 


Par Value \ 


Carried on Books 


Profit or Lost 


1 


oif 


A$^if?> 


?»;» 


2>0 0O 




/0# 


ZX>\C 























































































































































































































Fig. 58. — Card Record of Securities — Stock. 






REAL ESTATE LOAN 



Jh 



ADDRESS 


/) SUM £\ <Qi^\^^x^oXAJUxi^feu>C^. 


TIME | L^Lciur- RATE 6 °fo PAYMENTS OF INTEREST (? (x^A^mJ^c 


i 


OATE ^ 


-AMT. OF NOTE 1 PAYMENTS 


DATE. 


PAID TO 


AMOUNT 


OATE 


PAID TO 


AMOUNT 


X 


ir 


0*f- 


_2. 


PPtf 








m, 


!<sr 


0/f 


/* 


/^ 


Otf 




0() 










1 


























3 


?•£> 


OS 


3 


/<sr 


<?*sr 




3o 








































6 


26>~ 


0$~ 


Jl 


/<S" 


oS" 




fi£) 








































JL 


/A" 


oS- 


_2_ 


f-s - 


05 




Zxy 



































































































































Fig. 59. — Card Record of Securities — Real Estate Loans. 



^krcdnA ^)i.x] )(&[<\ %.i 


j<j> \ Uvi^ - .Q^UA^te^vJt *§>£& — (SD 6 % , 




;§T~ 


e«— 


ClL*A 


(frry-b-ed^t, &P o>-o ■ u^aXjuot — 


C^T-vfiJ d 1 - 




/ 












f' 




' <)- 





























































Fig. 60. — Card Record of Securities — Notes, Etc. 



150 



TRUST COMPANIES. 



TRVST. 

BONDS 



f^fors of UK'lJxa.-wvL, 4c^ g ^> 






INVESTMENT No <^ ■ 

^S~S QUE /<ftf$" 



i£& 



[ '«"-*-- 




iu«i 


„c. 


OATS 


•OUQHT 


■OLD 


for Br S*'« 


-a*. 


r» ««< 


•ALAMO* 




,w. 


( Ho4.fa3-iao aai^aan 


<x 


IIS 


/ 


a£M /( 


^oo 










/<?% 


/'* 


^ 


u 


tf<?C 































































































































Fig. 61. — Card Record of Securities — Bonds or Stock. 

HEAL ESTATE LOAN No. "2* 



to ^IsLa \jy% , U!) . CJcrvws^r<>-ux 

Ml MO. ' ' i*-' OATE 


ADORE 


SS 


3^ tkyufer^&k 

out ^//xf rvC" R»tc & °£> WT 


. Outi; 




Z»j?'' 






bcscwimoN or phopcptv 


myi 


oteiT 


CHCDIT 


uuwu 


,S~0 x fS'O (iet nm « «. SU3 (<ky\A£-Y- &£: 


_£ 


P? 


»3 


ji 


oo<> 










p 


p oo 




iMlWn ■* -^9-t^rV •f%y^<jjdk Ul] I 2.00O— BIDCS. 1 Af-«SO O — 


1_ 


fS 


Ai~~ 








_i. 


oao 




^2L 


ooC 




TOTAL #^<S"OC/^ 


























huimot m tut' mv. >ecxsv>JJlA c< - u -** ^rtfrC-vv^ 


























till UIT «0. f >f- ^— ■' OBtt. ut no. >J- *"| 




















































<«<»«« Q*X .0*^, J'l'Jr"*^ jJf/TOO^ wt-lfj-tft'o^ 
























































































































































































TRUST ^<^vv ^^mC^rTrurrJKoJ^ 














































IQ3^1 


!M I 





Fig. 62. — Card Record of Securities — Real Estate Loans. 

one large company having many estates in charge. The first three of 
these forms explain themselves. The fourth, shown in Figure 60, is used 
for the record of any securities other than bonds, stocks or real estate 
loans. For example, estates are often received in trust which are the 
owners of unsecured notes, or of time loans secured by collateral. The 
size of the cards is 8 by 6% inches. They are contained in a case which 
is provided with index cards bearing the names of the different trusts, ar- 

INTEREST RECORD 



TO 


AMOUNT 


PAID 




TO 


AMOUNT 


PAID 


3 


\s 


03 






L 


$ 




£_ 


1* 


<>3 


























£L 


wr 


Q2> 






4 


^S" 




x 


IS 


03 


























2l 


\s 


0\{- 






if 


£ 




£_ 


(4 


oti 


























-%- 


(S 


0/f 






4 


S 




i 


10 


o£ 




i 






















i 




















































































































1 — 























Fig. 63. — Record of Interest on Loans. 



FORMS FOR TRUST DEPARTMENT. 



151 



ranged in alphabetical order. They may, of course, be arranged numer- 
ically by the numbers of the trusts if preferred. In Figure 6l is shown 
another card form designed to serve for the record of either bonds or 
stocks; and Figure 62 gives another form for the record of real estate 
loans. The back of these cards contains a form for the record of interest 
or dividends, that for interest being shown in Figure 63. 



Security ^^^^^^^^^^^^^^^M 



y fVmp\JT\t bsM 



"fkr or Scares 



^^k 



Cj*jrjr^ec( gjb 



'\5~00 



o o 



Fig. 64. — Index to Securities Held in Trust. 



THE CITIZENS SAVINGS AND TRUST COMPANY, CLEVELAND. OHIO. 



!== 


DATE 


NAME'OF ESTATE 


TO WHOM P4HSIE 


„..» 




""» 


- HDi?4ff><lS OB . 


["■^o U »r «" 


LANCE 


* 




Wo 


3 




6x*fi#VJ- 


;o 


Z2. 


f&n 


















73 


=r 






# 


2: 


Li? 










2,1 


2££ 






<L1U 


fl 


#.0. CU-^a^a 




^r 


..si 


iOO 










- - ^1 


§6o 






J ^ 








































». 













































































































Fig. 65. — Line Ledger of Securities Held in Trust. 

SHEET NO T\. 



Mortgage No. / 2 t> S~ Estate of JfrfrAA/ A • ^W&C . 



To No. 



Bondsman (ftQb-rTsoK, t*%>>*->-c^- r J/^rtuA, A. ^H^%^n^ / &*,*£.) I /JQ,\ 

Collateral Bondsman i^'n.^n^C J?J&~>^iS & ' Jhau 

Owner (7-rtjU^t^K X\9+€~~%.t~~ 



±3& 



S^_ 



Date of Bond /^w», /' /<jeo Maturity . ^**». /*, /?»«?. 

Original Amount of Bond $ Seoo. — Extepdjd » 72»*/J /?«6. 

Interest Payable _ TTtmA- i^~ t- Tin*. / — 

Title Policy C'aMil J^L^^-nXa, . r (f-?w*/ & . /SJ^iJ/. 
Bond & Mge. Guar. Poticy7u!J?. t^fio .^■TC^Uant^ 



Insurance Company ! 



Amount Number 



Esplrjtio 



LTo, 



ox 



2i 



TWi ' 



Fig. 66. — Record of Securities — Mortgage Loans. 



152 TRUST COMPANIES. 

These records give complete lists of all the securities held in each 
trust, but in order to know the amount of any given security held in all 
the trusts in the department, it is necessary to provide another record in- 
dexed according to the securities. Figure 64 shows an index card for 
such use. Its use is merely to serve as an index to show what trusts hold 
any given security, and how much of it they hold. The total amount of 
the security held by all the trusts must, of course, be found by adding 
the amounts on the several cards filed after the index card for the se- 
curity. Some companies keep a regular line ledger for securities held in 
trust, a loose-leaf form for which is shown in Figure 65. 

Loose-leaf Records of Securities are used by some companies, and 
Figures 66 and 67 show the first and second pages respectively of a form 
for the record of mortgage loans used by a New York company. This 
record permits of more detailed information than is usually given in a 
card system. 

SHEET NO. £/. , 



Mortgage No. J IMS". Estate of. %&ss X J~*dCt . 

Mortgage Recorded Liber / / Page V«T* Date /&*\ / < 

Section £ Block 2 Jl Q 

Alignment Recorded M~* A_^ ^ ^fc^ . «-c I- «. ., £& , £ ft _ £ jfj f^ £ J^^ ^ 



Mortgage Recorded Liber // Page /AT* Date 7L* % / 0) jjoo, <§,£*&.%> jL-sru £ &J >9 €. 

Section C Block 2,£a 



Descriptio.n jf/*t~. -^W , A^c^^^C 4tt**. ^fiu*fr~v~U. /£»*uu_s 




~ i i r~ 

D2,t A'PjJJ./fe/r. Examined and approved by £«~*l*?5fci. Valued at $/t06t> * 

Fig. 67. — Reverse Side of Leaf Shown in Fig. 66. 

Usage seems to vary greatly in the matter of record of real estate 
held in trust. Some companies depend for a complete record of such real 
estate upon the rent book and the tax book — in addition, of course, to 
the original entries in the Trust Register and in the ledger accounts of 
the trusts concerned. Other companies add a complete list, in separate 
form, of such real estate. Figure 68, (page 219) shows the form of Real 
Estate Record given in the Book of Forms of the Trust Company Sec- 
tion of the American Bankers' Association. The book is provided with 
an index in front. 

Figure 69 shows a card record for real estate, giving about the same 
information as that given in Figure 68, and adding a plat of the prop- 
erty. Additional information, if desired, may be put on the back of the 



FORMS FOR TRUST DEPARTMENT. 



153 



card. These cards may either be grouped according to the trusts own- 
ing the property, or be arranged alphabetically according to streets. If 
the former plan is adopted, an index by streets will be needed to make 
the record complete; and if the latter plan be followed, an index by 
trusts owning the property should be added. 

The form for the Record of Rents recommended in the Book of 
Forms of the Trust Company Section of the American Bankers' Asso- 
ciation is given in Figure 70. This is made up as a loose-leaf book, the 
pages being arranged numerically as to trusts and alphabetically as to 
tenants in each trust. Another form of Rent Book is shown in Figure 71, 
in which provision is made for the record of expenses on the premises 
rented. Some companies elaborate the records in the rent book still 



Sir fit 



UW& 




H^.2>H- f 1 Sublet tfJo Oi^Lot \\k 



T^sr.riffan gLfcdfcffd _gjM M oj- cSwtf /OX> <tf dsuJJt^ „ 2-k /thru ^rUAi/ 



rL^JJLyt xdidj? taaad 



&z^JUM>k. 




Twat fxtoj? .*£AUro^(R >1UKjjUs Nn. 7^f 



VaA \i a.1". t a r> 



Total - 



2..U2. 



i{ 2>QO 



(o \ssc 



AasessH, 
"Re-ntj-At . 



OOP 



/fS 



2>\^00 



ljfcaygkt5fejSfl3 A 



HL 



jtujfcglasjd 



~ftrmfi,rR. < ; 



Fig. 69. — Card Real Estate Record. 



further, showing expenses in two columns, headed "Repairs" and "Sun- 
dry," and also providing a column for the record of sundry receipts, 
such as repayments of water rents, etc. Figure 72 shows a rent record in 
card form, the cards being five inches wide by eight inches long. 

Companies handkng a number of trusts which are the owners of real 
estate are of course compelled to look after a great many fire insurance 
policies, seeing that all buildings are covered by sufficient insurance, and 
that policies are renewed in due season. For proper attention to the 
matter of renewals, reliance is, of course, placed upon the Tickler. Some 
companies file insurance expiration cards in the general Tickler of the 
Department, while others maintain a special Tickler for insurance ex- 
li 



154 



TRUST COMPANIES. 

RECORD OF RENTS. 



Premises House 



$2 Adams Street 



Trust No. 430 



Roger Smith 



Tenant Henry A. Williams Estate 



Owner 



Rent, % 300.00 
Water $ 900 



_per Year, Payable $ 'S-o° 



_per Year, Payable %JJS_ 
Lease Commences None Expires 



per. 

per Quarter 



Month 



.by. 



Rent due, $_ 



Remarks Rent paid in full to 4///Q7, when properly was turned over to us. 



May 



'$97 



~*U W SlL. 



June, 



JU. 



■J*b- 



j>Jj- 



■ 9/4 . to 



ajc ,to .m/ 1 



Fig. 70. — Rent Book. 



pirations. Figure 73 shows the form of a card used for such a special 
Tickler. This also serves as a complete list of all insurance carried in 
the department. Some companies keep in book form a complete insur- 
ance record, and Figure 74 (page 147). shows a form based on that given 
in the Book of Forms of the Trust Company Section of the American 
Bankers' Association. 



vo..3.%L...CUb*^. &.....„ , 

Description .Zl..&£cKU..±Cf$hyx^.jClL4Aj^ 



Tenant 



iJO^W.M.ih^^-. 



payable in advance. 



Rent, $32. —. per 

' Lease Expires ...Q^rJ..3Q t J.$ c .0.L 




Interior Repairs by.. 

Exterior Repairs by )X....^. 

Water rent paid by J&0r&s>$I7Taxes paid by-Q^Q££. 



EXPENSE 


RENT. DR. 


RENT, CR. 

IQoH- 




■M 


ftf 


(jO/Q4x^& M- rtrrA^^U 


'*4 


^S" 


/forf- 

y 1 fe-^l 


3 2 




OJ. 


1 




$2 










Q~ ^ 






^0«Uji .. 4.... ) 


32 




u 


■- 1 / 




32 
















<lJi .^W 


22 




9u4^°. 


3 




32 
















cT t/ ^ 




r 


J-. 
















































































































































1 




























































Orif . Lol Y\ S*b-\al )S F«t Front C> L> F«l »«» / 


O Tin V«|. olUids, S)3«0— Of BUtt^t/OOOiS. ToUl Tu Vil, %/3oO~ Appriiwd ViU J3^"OOj£ 















Fie. 71. — Rent Book. 



TENANT 




FORMS FOR TRUST DEPARTMENT. 155 

PREMISES vS"^ CLAp Aajj^SF. ,, 



'Ml 






AMOUNT__ 

lease "01/nvjev 



^r- 



PER ^kA-^ 



WATER RENT 7 ^" 



VACATED 



REMARKS 



MONTH 




DAY 



1==L 



RENT PAID TO 



AMOUNT 



2a 




Zi^l 



^Uju 



4 



2j*ST 



J_L. 



aft 



2=S 



Fig. 72. — Rekt Record in Caed Form. 

The exact form of the Tax Book — in which property upon which the 
trust company is to pay taxes as agent or trustee or in other capacities 
is listed — will vary according to local conditions. The forms given here- 
with are adapted to use in the State of Ohio. Figure 75 shows a form 
for the record of taxes on city property. The record covers two pages, 
the second page shown in the figure being opposite the first. The same is 
true of the record of taxes on out-of-town property, the two pages of 



^3±t 






Mobtq»qo« 



[jS&S. 




AMOUNT OF INSURANCE \2yQ~Q~0 . ' 



qiK[ jJL^-p^dcdt. 



tf-Lr^y 



-y/i-S^ 



Policy No. 3 *"f ) lj-\ 2) 



^Ct 



Fig. 73. — Insurance Tickler. 

which are shown in Figure 76. Figure 77 shows a form for record of 
taxes on personal property, and Figure 78 a form for the record of water 
rents. These forms should all be used under one cover, either perma- 
nently bound or in loose-leaf form. 

Trust companies doing a considerable probate business, especially if 
they are called upon to administer large estates, find it desirable to keep 
a Probate Claim Docket, the standard form of which is shown in Figure 
79- This may be used either in a permanently bound book or in a loose- 



156 



TRUST COMPANIES. 



City Property. 



r— — — 


3tateaod County 
MOO 


WIIOLK' TAX 


TRUST 


PROPERTY IN NAME OP 


1. Name of 
The Clavel'd 
Trual Co 


Appeaiaement 






/,ro 






/6>3 


&0 


VV<r-<--i^< r l. 


JvVtc-vu.0^ >JfVtvua J .«l/ 





















































Fig. 75. — Tax-Book (City Property), Right-Hand Page. 















City Property. 




















■ Sub-dinaion 


Orig. 
Lol 


Sub. 
Lot 


Frail 


Strwt or Avt?nu» 


Feet 

Deep 


VALUATION 19UJ 


■rgju 


When 
Pejable 






p™ 


l« 


Land 


Building. 


Total 




H- 


^r&J.t 


1 


/af 


vST> 




tf&^ a.*. 


W 


_2 


oca 




_£ 


(70O 




_£ 


ftpo 




_12S~0 


V 


%AM^afx 










































d 













































Fig. 75. — Tax-Book (City Property), Left-Hand Page. 

Out of Town Property. 







County 


City or 

Village 


Sw. 


Tuwn- 


Damn 


Trart 


Oris. 
Lot 


Sub-lol 
[ail 


niocx 


Front 


Street or Deacriptlon 


A*. 


M. 


Valuation, 
1900 


Special 






PM 


K, 




OlLc 


VUlwviUjt - 






'h.Mit 






ff6 












/A^£^ 


2S-i O 































































































Fig. 76. — Tax-Book (Out-of-Town Property), Left-Hand Page. 

• Out of Town Property. 



. — " 


Slate and County 
1900 


Wholo Tax 


When Payable 


TRUST 


Property in Name of 


In Name of 

The Cleveland 

Truat Co. 






ftf] 


l\r 




*1 


r.r 


AiC.3-© 


VrLc^oij 




d-0 OYvJXJtg. 


















a 































Fig. 76. — Tax-Book (Out-of-Town Property), Right-Hand Page. 

Personals. 



RETURNS IN NAME OF 



WHOLE TAX 



JxU. t-rx -w , C£ . vH-o-^-VvvX-tj^ 



4 HOC. 



^U 



il 



^•■ao 



sM^ 



^O^X^^KQd. 



-i 



<P, 



q-ixj 



ilk 



Fig. 77. — Tax-Book (Personal Property). 

Water. 



,-M- 



31?, 



/^ St. 



Oe^rt 



.5 60 viyjaaa (£\JMk*xl. 



3- 



¥ 



^ od 



Fig. 78.— Tax-Book (Water Taxes). 



FORMS FOR TRUST DEPARTMENT. 



157 



leaf binder. This form provides for a complete list of all claims pre- 
sented against each estate, with all necessary details regarding each 
claim. Attention has already been called, in Figure 6, to the Probate 
Settlement Docket, also used by some companies. 

For every payment made by a trust company in behalf of any of its 
trusts, it is of course imperative that a voucher be obtained. In the 
handling of many trusts, such as that of executor, a voucher for every 
item of expenditure must be filed with the court at the times when re- 
ports are submitted to the court. Because of this fact, some companies 
deem it advisable to obtain for each expenditure two vouchers, one marked 
"original" and the other "duplicate;" the former is to be filed with the 
court, and the latter to be retained by the company. 

PROBATE CLAIM DOCKET. 



Probate Court No. 2?S) SI' [ Date of Letters . J^.J^ A , IW^ Estate o f v**-"- r^^^SJl . \M-o-^^u! JL> 



.Deceased. . 




Fig. 79. — Probate Claim Docket. 

Figure 80 shows a common form of voucher. Before payment of the 
bill described, the voucher is marked "correct" by the bookkeeper, and 
"approved for payment" by the Trust Officer. The size of this voucher 



TRUST DEPARTMENT 
THE UNION TRUST COMPANY T 

OF PITTSBURGH 

„..»— -5?\ i-^J-^J—U^ ^ .... ._ OF THE ESTATE OF 



V*iSCtM_G J.y.l^jJ^^OL^^Jj dr. 



.&ctk 



'/w-s+sta 



<?*,. 



OhsLx^AJ>AX t (j^-j- ^.rv-U-x^a of La 



ML 



*S n o a 



^T 



"3" 



APPROVED POR PAYMENT 



.■»... 9L9 .S<n^h..~. 



Tbu*» Orrtou 



-g-, (3toSL_ 



RB A.BOVK AOCOC 



ITf ST7IJ. FOB TTTB ABOVK AOCORNT 



PITT8BUHQH. PA 

ON TRUST COMPA TSBURGH 

DOLLARS 

1 



T/^^^iilr^ 



Fig. 80. — Voucher. 



158 



TRUST COMPANIES. 



is 8% by 7 inches. It is intended to be folded once, crosswise, so that 
when filed away the information given on the back, shown in Figure 81, 
may be easily read. The vouchers for each trust are numbered con- 
secutively as issued. For keeping track of the proper numbers to be given 
to vouchers as issued, a convenient device is to have on large card-boards. 
or pasted on the covers of the department check-book, a list of the dif- 
ferent trusts in alphabetical order, the name of each trust being followed 
by a list of numbers succeeding those of the current voucher numbers. 



TRUST DEPARTMENT 



J^lo 



*^S1K>t2~... 



THE UNION TRUST COMPANY 

OF PITTSBURGH 



OF THK BNTATR OF 



OF THK BNTA 



._Shju^Ajb&:_ .__ _ : 




Distribution op Aoqoctcv 



cp, 



n^>v 



<L^a 



..•&.&Q.Q 



1ZI.ZX1ZI 

j. - 

TOTAC \\S~0OO 



Fig. 81. — Back or Voucher. 



As each number is issued, the number given it is scratched off the list of 
numbers ; so that the correct number for the next voucher issued is readily 
seen without the trouble of referring to the journal of the trust con- 
cerned. 

This department usually keeps its uninvested funds on deposit with 
the banking department of the company, (or sometimes with another 
company), and makes all payments by check; and the memorandum 
"Check No. " in Figure 81 refers to the number of such a check. 



FORMS FOR TRUST DEPARTMENT. 



159 



A customary form for the department check is shown in Figure 82. The 
bookkeeper gets the debit items for entry in the books of this depart- 
ment from the stubs of this check-book. He obtains the credit items 
from credit slips, one form of which is shown in Figure 83. 

Statements of accounts required by the courts are usually made on 
ordinary journal-ruled statement paper, the entries being made in chro- 



W 






I X J MO 




WnJtew Co-^to!*«*lpM< 



Fig. 82. — Trust Department Check. 



CREDIT INCOME ACCOUNT. 



^Be^te of 




-fr^Ciyi*^ '"'t^if-'^v^J^y 



I nterest o{.^^.:^.^^^.^r.^.... 




/0-u 



Date '.'I'r^.:. 



Fig. 83.— Credit Slip. 



nological order, items for principal account not being separated from 
those for income account. In monthly or annual statements to bene- 
ficiaries or to the makers of trusts, however, the items on the two accounts 
should be shown separately. Figures 84, 85 and 86 show different forms 
for statements to beneficiaries, designed, as will be seen, to show sepa- 
rately the items in principal and income accounts. That shown in Figure 
86 is arranged for use in connection with the individual trust journal 



160 



TRUST COMPANIES. 



shown in Figure 14. The statement, it will be noted, is practically a 
copy of the j ournal ; and the stenographer simply copies the entries from 
the journal without intermediate copying by the bookkeeper. 

It is a growing custom for individuals to deposit their wills with 
trust companies, especially in cases where the trust company is made 
executor. In receiving wills the trust company undertakes to safely keep 
same and to deposit them with the proper authorities as soon as possible 
after the decease of the testator. Figure 87 shows a form for the 
Record of Wills on File. This is a card form, the cards being kept in a 
cas^ in the vault, and being arranged in alphabetical order. 



The National Safe Deposit, Savings and Trust Company of the District of Columbia. 

TRUST DEPARTMENT. 

StaUmmt of the Aaou.nl of said Company a, xJUx^lTXt. j&T Uj iQiuXOyv, J^X-CjOUr^/ f„ ^ij<u!^C- ending /Jt' g.. 3 ( . .190 3 





fc 



sfB 






'i.t.vliA^ 



&*^>~ a . C>w ka^U 



h 



0U,.t«a& 



( *^ < $j>Ss<-i JrU^AV j- 



Fig. 84. — Statement to Beneficiaries. 



M Statement of Account. 

(JiL.^L .Trust Company^ l^^^pLi^A'-^-Lllv * s &*JL}Mui*4j. 
Statement of Receipts and Disbursements of money in above Trust from k>w<^*/v^ 1^)1^3 to 

Dr. 



/, J.<to3 



(&( Ji ^ . J*- AAV » 



rtXruU,.^ ' V'^/j^/.^- JttxjiTC~ Cn. 



gjM, 'H/TTY-i-J 



M& 



^ui-^y^. 



;i 



tjk^.^.tr ■&}.).« i^jr 



i , ^.oti^o-, . vH 



gLrs^flAg ftg 



vH^y^l^ 



i ■-'•'.--■ I 






^. 



Cr. 

PRINCIPA 



> be filed in Court ; but <*ly (or accounts rendered to l«ntficiaries. 
Regular size of r-heet 17x14- 

Fig. 85. — Statement to Beneficiaries. 

STATEMENT OF ACCOUNT. 



THE CLEVELAND TRUST COMPANY, Ttustetfar- 



-E8 to.te of Hiram, n. Holicco 



Receipts and Disbursements of Money from iteA^etfoe r 1, 19 44- 

NIENCK. NOTE 



-TO — Jcnuory 1, lOOH. 



THE CLEVELAND TRUST COMPANY. 






_12£i_ 



r. S. r.tciK, Jtr.t 213 Twelfth St., Nov,, 
U. 7. Kenr.er, " 1294 Third five., " 
A. Carpenter, repairs on 213 Tnr-lfth S*., 
M. S. V/hitcoi/.b, in full for Troy property, 
25 eovjer.*) fro.: Tcy.yp. R. r. Vonds^ clue Hov. 
Hiran R. Koines, Jr., - monthly reslttanec, 
l;ary !,. .'.'cjj r:3, do. 

Junius Ilolres, do. 

p. Plu.Mr.er, repairs or. Koine? rftildinp;, 
7;. T. rraKf, interest on uiortgag-e, 



74 


100 


75 


100 


76 


100 


77 


213 



Fig. 86. — Statement to Beneficiaries. 



FORMS FOR TRUST DEPARTMENT. 



161 



In the above pages the writer has attempted to give the principal 
kinds of records and forms used by the average trust company to record 
the history of its business in the trust department. There are of course 
companies undertaking special lines of work which call for varieties of 
forms not included in the above sketch ; and besides forms for such special 
lines of work, the individual preferences of the officers in different com- 
panies add many forms of greater or less utility which from the nature 
of the case it would be neither possible nor useful to attempt to include 
here. There is also a class of forms, legal or semi-legal in character, 
which the trust company uses constantly in its trust department, but 



Name 



<ZJ sbz^rH^^ . IQuLA^l^ jA^yZ 



Address 



aa^ 



3jfc?J& [A 



WILL 




TEMPORARILY SURRENDERED 






RECEIVED 


DATE , 


TO WHOM 


RETURNtu 




f 
i 


ft 


*j**xfcs^. U)oa&x,*fe: 


Mo if 


/! 


J 




J 6 










I " 














I 
i 











Remarks 



Fig. 87. — Record of Wills on File. 



which it has not seemed best to discuss in the present articles. These in- 
clude forms of bonds, stock certificates, voting trust certificates, cer- 
tificates of participation and so forth. The exact form of such documents 
depends in the first instance upon the particular contract involved, and in 
the second instance upon the individual views and preferences of the 
lawyer or lawyers who prepare them. And while there is of course a 
general similarity in the forms used, the considerations just named result 
m such differences in details in documents of this character that it would 
be difficult to fix upon what could be called standard forms. 



CHAPTER VII. 

FORMS AND RECORDS FOR THE SAFE DEPOSIT DEPART- 
MENT. 

THE necessary forms and records for the safe deposit department 
are comparatively few in number. The business of the department 
involves the renting of individual safes or boxes, and the caring 
for packages left for safe-keeping. In theory, the business is sim- 
ple; but experience demonstrates that complicated situations are apt to 
arise; and it is important that the few forms needed should be prepared 
with care, and those affecting the contract into which the company enters 
should be approved by competent counsel. The Trust Company Section 
of the American Bankers' Association in 1904, and again in 1905, appoint- 
ed a special committee to report on various matters affecting the safe de- 
posit department, and including a compilation of forms. The reports of 
the two committees, bound under one cover, have been issued by the asso- 
ciation, and contain valuable information. The forms there given, thirty 
in number, provide for the needs of the largest companies, but of course 
include many that are not needed by the safe deposit department of the 
average trust company. A few of these forms, together with others col- 
lected from different sources, are given here. 

The identity of prospective customers of this department should be 
established with care. When the applicant is an entire stranger, some 
companies send to persons named as references a printed letter reading 
as follows: 

Dear Sir: — 

Mr. of , whose signature is attached, 

has mentioned you as a reference. If you consider as an honest 

and reliable person, will you kindly affix your signature and return to us 
at your earliest convenience? It is understood and agreed by us that this 
will in no way make you liable for any damages. 

Yours very truly, 



Manager. 

Sign here 

Signature of 



Whatever the method used for the purpose, the company should sat- 
isfy itself that every applicant for a box in the vaults is the person he 
claims to be. Should he rent a box under an assumed name, in case of his 
death the company might be put to considerable expense and certainly 
would be put to some trouble, in determining to whom the box should be 
surrendered. It is also important that the customers of this department — 

162 



FORMS FOR SAFE DEPOSIT DEPARTMENT. 



163 



as of all departments, for that matter — be known to be persons of ordi- 
nary honesty; for while every precaution is taken to conduct the business 
with care, the possible presence in the vaults of a designing and dishonest 
person involves too much risk for the company. 

Assuming a prospective customer of this department to have been iden- 
tified as a proper person to become a renter of a box in the company's 
vaults, the first forms needed are the receipts mutually given by the com- 
pany and by the renter. The company gives a receipt for the payment 
of the rent of the box, a form of which with stub is shown in Figure 88. 
Upon the back of this form are printed the rules and regulations of the 
department, which the renter, by the acceptance of this receipt and by 
the terms of the receipt which he gives to the company (see Figure 89), 
agrees to abide by. Some companies prefer not to print the rules and 
regulations on the back of the receipt, but simply to include in the receipt 
some such words as these: "Subject to the rules and regulations made by 
this company." This is intended to include not only the present rules 
and regulations, but also any that the company may see fit to make in 
the future. 




Expires 



V^o/o 



'/*~7 



Charge, % 



^s_ 



THE BLANK, TRUST COMPANY. 




jCleveland, 

Dotty 

190 <P. to 

ich term, subject t£ the rules and regulations endon^^hereon, it shall 
The nubility of the Company, by reason of the letting, is limited to the exercise op their accustomed 

DILIGENCE TO PREVENT THE OPENING OP SAID SAPB BY ANY PERSON OTHER THAN THE LESSEE OR BIS DULY 
AUTHORIZED REPRESENTATIVE, AND IS ASSUMED UPON THE EXPRESS AGREEMENT THAT SUCH OPENING 
NOT BE INFERABLE FROM PROOP OP PARTIAl OR TOTAL IW OP THE <XM 





Fig. 88 — Recetpt for Safe Rext. 



When the keys are turned over to the renter, a receipt is taken from 
him, in which he acknowledges the receipt of the keys and agrees to the 
rules and regulations of the company. His signature to this receipt also 
serves as a means of identification in the future. For many obvious rea- 
sons, however, this should not be relied upon as the only means of identi- 
fication ; and it is customary to record other information for this purpose. 
Such information may refer to personal appearance — height, complexion, 
color of hair and eyes and especially any visible scars or marked peculiari- 
ties. In the case of a person who continues to be a customer for a long 
term of years, however, such information may become a source of con- 
fusion, because one's personal appearance may change. Of more value 
are such facts as the date and place of birth, father's name and mother's 
maiden name. Many companies also give to each renter a password, 
although such passwords are rarely used, being easily forgotten, and of 
doubtful utility. Except in the cases of those who rarely visit their boxes, 
the attendants soon become familiar with the customers, so that resort to 
special means of identification is not needed. 



164 



TRUST COMPANIES. 



It is convenient to have this information recorded in the same place 
as the signature of the renter, and in the form shown in Figure 89 a card 
6 by 4 inches in size is used for the receipt from the renter and for his 
description. The card also contains the business address, the home ad- 
dress, the number of safe, the password, the date when rent becomes due, 
name of person who introduced the renter, and a form for surrender of 
the safe and keys. It also contains the signatures of the deputies, if any. 
These cards are filed in alphabetical order, and thus provide an index of 



the renters of safes. 



9 



Cleveland, O . 






n,wod 



-hereby acknowledgs'to pave received this day from THE 
CLEVELAND TRUST COMPJW+Y, a receipt for rent of a safe num- 
bered I I whirh with Its endorsements, embodies the 
It. y/ 



whole contract concerning 
received two keys of said safe. 



^J /vtk^mL 



. also acknowledge to have 




DESCRIPTION 




Cleveland, 0.. 



PANY, wlth__ 



— in the vault of THE CLEVELAND TRUST COM- 
keys, Is this day surrendered by me. 




*P 



Ca 




.j 



Fig. 89. — Receipt and Identification Card. 

Very frequently the renter wishes to appoint some person or persons 
to be his deputy or deputies to have access to his box. It is convenient 
to have such appointments on the same card as the signature and descrip- 
tion of the renter; and in the system here described the forms for the 
appointment of deputies, shown in Figure 90, are printed on the back of 
the card whose face is shown in Figure 89. Some companies have the 
appointment of deputies, in practically the same wording as shown in the 
figure, on a separate card which is filed alphabetically after the card 
which contains the renter's signature. Information for the identification 
of the deputy should appear on the card which contains his appointment. 



FORMS FOR SAFE DEPOSIT DEPARTMENT. 165 

Figure 91 shows a form used to revoke a deputy-ship. 

Figure 92 shows a safe deposit register in book form. As in the case 
of the card register, it contains on each sheet the signature and receipt 
of the renter, his identification, appointment of deputy and final receipt. 
The book may be either permanently bound or in loose-leaf form. If 
permanently bound, a separate alphabetical index of renters will be 



3 



Cleveland, O 




7, Il0( o 



.hereby appoint — KT~7^\'\^- / ^^ ^-VCrjfr. I ^-wcp. &y\ 



t ^Kj ^ A ^ ryi 




deputy to have access to and control of the con- 
No. -^J-^l now rented by^li>S»£*ln the vault of 

D TRUST COMPANY, at all times, with the same 
would have if personally present, until this au- 



thority 13 revoked by / V-*-g^ in writing to the Company- 



Witnessed by 




Cleveland, O.. 
-hereby appoint 



to be deputy to have access to and control of the con- / V 

tents of Safe No now rented by In the vault of_ 

THE CLEVELAND TRUST COMPANY, at all times, with the san 

power that would have If personally present, until this 

thorlty Is revoked by in writing to the Company. 



It Of_ [ 

ame I -—.- .» 

au- ^>— <* 



Witnessed by- 



Cleveland, O. 
.hereby appoint 



to be deputy to have access to and control of the con- 
tents of Safe No now rented by in the vault of 

THE CLEVELAND TRUST COMPANY, at 'all times, with the same 
power that would have if personally present, unll this au- 
thority is revoked by In writing to the Company 



Witnessed by . 



Fig. 90. — Appointment of Deputies. 

Where two or more persons rent a safe as j oint tenants, in place of the 
form shown in Figure 89 there is used a card form which is identical with 
it except that the receipt for keys reads as follows : 

"We hereby acknowledge to have received from The Blank Trust 

Company of Buffalo, New York, a receipt for rent of safe No. , with 

rules and regulations of said company. Also keys of said safe. 

And it is hereby understood and agreed as follows: viz., — Either of 
us may at any time surrender said safe without the presence of the other. 
Either of us shall have the power to deputize, in writing, any third party 
or parties to have access to the said safe, and the signature of only one of 
us shall be necessary to such deputization. And any such deputy or depu- 
ties shall also have full power to surrender said safe at any time. The 



166 



TRUST COMPANIES. 



authority of such deputy or deputies shall continue until written notice to 
the contrary is given The Blank Trust Company, of Buffalo, New York, 
by the one signing such deputization. And the survivor of us shall have 
all the powers and rights in respect of said safe that both, or either of us, 
can exercise during our joint lives." 

A shorter form, used for the same purpose, reads as follows: 
"We, the undersigned, agree to the rules and regulations of the Sec- 
tion Safe Deposit Company, in force at this date, and such reasonable 
rules and regulations as may be hereafter adopted. And we agree to hire 



Section Saf< 

(City) 




W 



% 



TQO 



eposit Co. 



(State) 



Sirs 



Please take notice tliat from and after this 
date Mj£=?iJ^ 



who is my deputy on Safe No L.!J.2t.hb- in the 

Vaults of your Company, rented by me, is no 
longer/authorised to have access to said Safe. 

Yours respectfully, 

This revocation will not be considered operative by 
the Company until acknozvledged in writing as received 
*by them 



Fig. 91.— Form for Revoking Deputyship. 



and hold safe number 



as joint tenants, the survivor or survivors to 



have access thereto in case of death of either, but either has the power to 
appoint a deputjr. Either of the tenants has the right to surrender the 
safe." 

Where the safe is rented by a corporation, the same form of receipt 
as that given by individuals may be used, but it becomes necessary to 
have, in addition to the receipt, an appointment of the party or parties 
who are to represent the corporation in access to the safe. For this pur- 
pose a certified copy of the resolution of the corporation is desirable, andi 
the following is a form used : 



FORMS FOR SAFE DEPOSIT DEPARTMENT. 



167 



Safe Deposit Register. 



'tja^.q/os- &U.7, 'ot 



n H- 



2. a i q *S"^£ 



3/{ 



Name op Rente 



•fC-^ Oa^JL Ucdu.aj 



Sill ^t-^1^ cloy. 



SIQNATURE AND RECEIPT OF RENTER. 



» I hereby acknowledge \o 



hs/vtt received 1 



190 y$~ 



B a Receipt No. 'Z O 3Q for rent of safe numbered I^Jj-j Wh ich embodies the 



this day from 



Place of Business 



Post Office Address 

Ha fl^^- 



Identification 



whole contract concerning it 

I also acknowledge to have received . 3— keys of said 



r& v 5^. (X0oVW< 



<? <U<1 



3 /<S6^. >^WtO& .tv^.'^-'U^^.K^t .frw. 



y^a ^i 



/feuJ^v, | %Jia^J. , . '\£hj^<dh Sf.f <<V„ Via. S>Jc^l 



Namf. of Deputy 



Q\.llAAc^*ja<Xt- 



APPOINTMENT OF DEPUTY. 
1 



lit '*>*£" 



Residence , 



to have access to and control of the contents of above safe in the vault 



Place op Business 



deput w to have access to and control of the contents 01 

o^u! (MilL csy -JC Q/uu&tr (^Y^~a-^ 



)4 OU^AA_a>L4_^1U. 



Post Office Address 



I hereby designate j Y[ . ill . .^n\n 



SL^l 

: Of ab 



until this authority is revoked in writine to 



e Company. ' 




^ OM. $*/. 



Signature o/Detuty. 



<Jh.a. o^^JT 



Apa^.\ 



References 



(Oh^rf. a^cJc ..yvti ^ -Ll^ ) 



Pinal Receipt 



190. 



I hereby certify that all the papers aad other property placed within the vault of 



in pnrsnance of the contract above cited , ha ve. been duly and properly withdrawn 
therefrom and are in the owner's full possession, and said Company is discharged 
from all liability in respect thereto. 



Fig. 92. — Safe Deposit Register, in Book Form. 

"To the Section Safe Deposit Company: 

At a meeting of the board of directors of the Ham and Sandwich 
Company, held at its office on the 9th day of February, 

1906, the following resolution was adopted: 'Resolved, That 

shall have the right of access to the safe (No. ) in the vaults of the 

Section Safe Deposit Company, standing in the name of this company/ 

(Signed) 



(Seal) 



Received, 



Secretary. 
-190 " 



President. 



168 



TRUST COMPANIES. 



This resolution may name certain individuals in person, or it may name 
the officer or officers of the corporation who are to have access to the safe. 
In the latter case, there will also be needed a certified list of the officers 
of such corporation, which list must be refiled as often as the corporation 
holds an election. 

For the record of cash transactions the only forms necessary are a 
Cash Book for receipts only (no cash being paid out in this department, 
except for occasional rebates), and cards, or books if preferred, for the 
ledger accounts of renters. Figure 93 shows a form of Cash Book. At 
the close of the day's business (or, in practice, at the beginning of the 
next day) the cash received during the day is deposited in the banking 
department to the credit of this department; the amount of such deposit 
being shown in the column headed "Amount Deposited." 

For the ledger accounts with customers of this department card led- 
gers are generally used. A form of such a card ledger is shown in Figure 

301 

RECORD OF RECEIPTS-SAFE DEPOSIT DEPARTMENT. 



DUE 0*« 

/fO(o 



a^m^yt^f j?" /#,) & 



TT 



"fay 



2l 



/<p 






2! 



r 




3, 




4-fe 



—fbi^.s'A.'-. 



£L 



4b 



*L£a 



01& 



& 



£22 



Fig. 93. — Safe Deposit Department Cash Book. 



94. The size of the card is 6 by 4 inches. The record is con- 
tinued, if necessary, on the back of the card, which is ruled in the same 
way. These cards are filed in a case according to due dates of rent, and 
thus constitute the tickler of the department. Instead of this plan, how- 
ever, some companies have the cards prepared with a tab at the top of 
each upon which is printed the name of the month during which the rent 
expires. The tab for the January cards is at the left upper corner of the 
card, and that on the December card is at the right upper corner. The 
tabs on the cards for the intermediate months are arranged in order be- 
tween these, so that when the case is filled with cards the eye may by 
glancing at the tops of the cards pick out those containing expirations 
for any given month. A sample of this card for the month of February 
is shown in Figure 95. Under this plan the cards are arranged in the 
numerical order of the safe numbers ; and the tabs at the tops of the cards 



FORMS FOR SAFE DEPOSIT DEPARTMENT. 



169 



serve as ticklers. Towards the last of each month the cards for the fol- 
lowing month are looked over, bills for renewal are made out, and the 
cards replaced. The bills are made out in duplicate, one copy being 
mailed to the renter, while one is kept by the teller who receives rent pay- 
ments, serving as his memorandum of rents due. 



H>M ^fchu^| 



3^ S 




■JLs 



/L^~^\- 



St. 



tf (TOO 
RENTAL ^ «~~ 



ax. 



EXPIRATION. 



u 



a 



'■#*■ 



REMARKS 



Fig. 94. — Ledger Card. 



«rc »C«TH LIDQO 


CARD* 






















DAT! 


DEBIT 


CREDIT 


DATE 


REMARKS 


DATE 


DEBIT 


CREDIT 


DATE 


REMARKS 


7i|ot 


sS 


cr 


^5 


OO 


] hH 


































































































































































































































f^ 




























s ^ 


























r 1 












irrici tou 


IPttCNT CO. 1M-1-6-0* 



NAME ^s W. (>MA<UW SAPP Nn /3 F YP. RAT IOnY7 
ADDRESS l*>(0 ■^\J\X-4~^ / k >S>K rpkitai IC).— DCDinn / t£-ir 


REMARKS 


o - a 

NOTICE 






DATE 


DEBIT 


CREDIT 


DATE 


TO 


REMARKS 


4a, 


T 


OS 


to 


OO 


10 


OO 


BoJL. 


7 


OS 


*in\oL 




























































































































































































/ 


hw> 




























j the cit 1 


I2ENS SAVINGS ANO TRUST COMPANY. r4 „ w ,„.,„.„, 



Fig. 95. — Card Ledger, with Tab. 



12 



170 



TRUST COMPANIES. 



Some companies prefer to have the department tickler in book form, 
as shown in Figure 96. This book is indexed by years and months. 

It is desirable to have a record showing the history of each safe, and 
for this purpose the Safe Register, shown in Figure 97, is used. As will 



SAFE RENTAL EXPIRES. 



X.LdJLlAA__ 



190 



Contract 1 


xpires 


Name 


Addrni 


No. 
St 
Sate 


No. 

ot 
Mos. 


Amount 




When Paid 


Remarks 


<V- 


1 


0{p 


' k{. O. QrJUs--yvCtA/ 


31 Ud-I^Si-. 


^ 


/} 


^ 




M. 


1 




[} 


1 




u 

4. 0.. CLnv,xfctrw| 


au r hkaiKjrr\, 


an 


/a. 


10 




» 


/f 






1 




*■&>$. dh^.n^r 


3 1 4 (XAxXsw^j 


no 


/ ^ 


vS" 












3 




^U.fft. fenmr^. 


na (L^ifU 


M I 


6 


? 




.. 


^ 






3 




J, J. \J k/\\j^& 


' h-H S.\.<blULmM 


"-STS" 


.2. 


xo 






3 













































































Fig. 96. — Tickler Page. 

safe register 



Dale 

MOO 


No. 


Price 


Name 


Address 


Remarks 


W. 


5 


1 


ts 




\jj — ; O Vx^a_T5v 


/H<? ^^ S*. 




j^£ 


03- 
1 




s 




< l. L> Jj^ucjfcd*^ 


/ A2>7 "TtUvrcrv <S/ 


^<^/mW 4*^^11$ 










cf o 




o 


















































































lull 




2 


% 




C&.S. (JbjL^cA. 


74 birf-dhhrU, 










>s 




^uuL^^jv/J. Co-evtPT- 


mi Qxjdfa*., &t-. 




<LJL 


1 <J 




3 






7is<\ »L^ ILm U- . 




<J i 





















































































3 













Fig. 97. — Safe Register. 

be seen, this record shows at any time what safes are unrented, and who 
are the present holders of rented safes, as well as who was the renter of 
any given safe at any given date. 

Figure 98 shows a card form for this same record. These cards are 
filed in cases having index cards for every ten numbers. The tab at the 



FORMS FOR Sx\FE DEPOSIT DEPARTMENT. 



171 



top of the card shows the last figure of the number, so that the card may 
be easily picked out after the index card is located. Thus, the card shown 
in the figure would be the fifth card filed after the index card 970. In 
addition to the information called for in the form shown in Figure 97, it 
provides for the record of the number of the lock on the safe, and the date 
when the lock was changed. This last memorandum has reference to 
the practice of the most careful companies, of changing the lock to a 
safe every time the renter is changed, so that in case duplicates of the 
keys have been made, they will be useless as a means of gaining access 
to the safe. This is an example of the extreme care taken to provide 
against any possible contingency that might occasion loss to a customer 
through negligence on the part of the company. 



SAFE NUMBER Q *| J-f- 


RENTAL PER ANNUM. *S°r~ 


RENTED 


NAME OF RENTER 


LOCK 
NUMBER 


LOCK 
CHANGED 


SURRENDERED 


"^i^ojoi 


(ib-niL'KiJUA, U\ . &~ix^tzr 


374 


^jfrt?/o 3 


"V^o/oS 


Hhlos 


lihiA^UAA V\ . fc'^w-K^uzXC 


Afq-5 


/0 //o/*/f 


"111 Off 


'lis jos 


£&.. S. v7cc lyuiZl 


G>$7f 








\ 



































































C — "") 








X f 








1*1 n»«u» 4 twcKiuu-TonNro no 









Fig. 98.— Safe Register, in Card Form. 

Most companies keep a Visitors' Register, a form of which is shown 
in Figure 99- In this book the attendants make record of every visit that 
is made to the safe deposit vaults by customers or by employees or officers 
having safes. The word "Room" at the top of the last column refers to 
the coupon room to which the visitor retires with his box. The usefulness of 
this memorandum lies in the fact that customers frequently are so careless 
as to leave articles of value in the coupon room when they replace their 
boxes in the vault. Before another person is admitted to the coupon room, 
the attendant examines it for any articles that may have been left; and 
if he finds any, the Visitors' Register shows to whom they belong. It 
will be seen that from this record the company can learn just what visits 
have been made to any given safe, by whom they were made, and the 
other particulars shown in the figure. This information is frequently of 
great value. 



172 



TRUST COMPANIES. 

VISITORS' REGISTER— SAFE DEPOSIT DEPARTMENT. 



30 i 



DATE 



y>. 



NAME 



l^Ojdli^^^^^iM- 



S'tf-'K^v^ 




v Kg^WA^-/ 



L)i!Ln,..<R.6*+r*M 



^■Q^w-aJlXL H-t>-Cvrt^^4-^yv^ 



ARRIVAL 



%£3 



DEPARTURE 



REMARKS 



BOX 



ROOM 



<?:os 



$j£it 



$lo£ 



/o:x\ 



io:h<> 



Silk. 



vn 



to; *■£ 



lo:>s:(o 



3.13 



its 



3(oO 



XQ2 



£UL 



12. 



3~ 



i o 



Fig. 99. — Visitors' Register. 

Some companies have the bookkeeping for this department dene in 
the department, while others, especially the larger ones, have the records 
involving cash kept in another department. If the latter plan is followed, 
it is necessary to have a set of debit, credit and memorandum slips for 
bookkeeping information. These include rental tickets, giving full infor- 
mation when a safe is rented, surrender tickets, for use when a safe is 
surrendered, credit slips for payments, etc. The exact forms of these 
tickets will depend upon the particular system of the company using 
them. This department also needs other simple forms, such as bill-heads. 

The Storage Department. 

As already stated, in addition to the renting of safes, this department 
undertakes the storage of articles in separate packages, varying from 
envelopes containing an insurance policy to trunks or chests containing 
silverware, books or other bulky valuables. This business is simpler than 
that of renting safes, involves fewer forms, and necessitates fewer precau- 
tions, the responsibility of the company being well-defined. The customer 




<0&<^^s & 



LUATION /. 

/<b CO- 



^^fcT 



THE S LANK TRUST COMPANY 



CERTIFICATE OF DEPOSIT 

NOT NEGOTIABLE 



1028 



^> 



bis to to 



CLEVELAND, C. 



f/ ^^^ut^£™~-^ 



/*-.- 



6 



DEPOSITED WT1H TkiJUNK Tkust COMTANY »f CHICAGO, I l_l_, [>OR SAFE KEEPING 
Os>t^,y ^6T^<^~ Ls/t^ — ■f(S.^t-^ < ^ tM( ^ iin TO CONTAIN 




IN CONSIDERATION WHEREOF THE SAID DEPOSIT 6 TO BE SAFELY KEPT BY THIS 
COMPANY SUBJECT TO THE CONDITIONS AND REGULATIONS ENDORSED HEREON AND WHICH ARE MADE A PART OF 

THIS CONTRACT. FOR THE PERIOD OF <^^^V- -^ -" V=-r *-t- -->-, . AM) UPON THE EXPIRATION 

THEREOF. OR SOONER IF DEMANDED BY THE DEPOSITOR. TT SHALL BE RETURNED UPON THE SURRENDER OF THIS 
CERTIFICATE, THE IDENTIFICATION OF THE DEPOSITOR AND THE PAYMENT OF ANY CHARGES. 

THIS CERTIFICATE MUST BE PRESENTED UPON THE WITHDRAWAL OF THJ.DEPOSIT OR ANY PART THEREOF AND IF 
LOST. A BOND OF INDEMNITY WILL BE REQUIRED BEFORE DELIVERY. 

PACKAGE Hn//~ ■' J3 . 




IT^^t^/C^^C^T^-^O^y 



BAW M «*n KMVT OefMMTMMMT. 



Fig. 100. — Certificate or Deposit, With Stub. 



FORMS FOR SAFE DEPOSIT DEPARTMENT. 



173 



Date • / \-*L. 1 90 w 

NAME 



Time / ^fsV 



7^ 

Expires ^/'Zl ,90^? 

Charge, j/g^v. 



THE 3UA N K TRUST COMPANY 



eceived from. 




(- 



^^C-DoUars, for Stg^e n f.^^^^^f^ i n the Vault 

of this Company, from ^3^<^y /4=> -- ipn << to r^t^L^ ^ >--- inn-y 

under renewal of original contract therefor, it being agreed that all the terms, conditions, 
provisions, and limitations of liability, provided for therein, shall be considered as though 
herein incorporated. 



$/^~ 




'-ih<y?^iW' , 



T: 



Fig. 101. — Renewal Receipt. 



Manager of Safe Deposit Deparltmtnt. 







Cleveland 



n CX^Ji /, iqo^r 



-hereby acknowledge to have received from THE CLEVELAND 
TRUST COMPANY a Certificate of Deposit No. I 3~& covering 
package Np./fltS^S" valued al^l'S'QOt which with' its en- 
dorsements embodies the whole contract concerning It,, 



IaP^\U. \Hclsi>i2a*ik 



5) 



Cleveland, O. 



hereby appoint 






to b»,y^Cf deputu — to have access to ani' control of package 

NQ./fllfrJ&aS- now deposited by "r\AJ?. a the vault of THE 

CLEVELAND TRUST COMPANY at all times with the 

same power that l_Z would have If personally 

present, until this authority is revoked by-*VH£. in 
writing to the Company 




liPS \M \^qyyu^^^ 




IaP^kH.^ 



Qd& A* a ?/ vi^vO^Mx 



Cleveland, O.-- 



hereby acknowledge to have received from THE CLEVELAND 

TRUST COMPANY the above described deposit, In good order, and 

have surrendered to the saki Company their Certificate No 

covering the same. 



O -tS 

o y 

§ 3 



°H 



9! 



Fig. 102. — Renter's Receipt for Certificate of Deposit, Etc. 



is given a receipt, which is sometimes called a Certificate of Deposit, and 
sometimes a Storage Receipt, a form of which is shown in Figure 100. 
The back of this receipt contains the printed conditions and regulations 
of the company governing storage of valuables, and a receipt to be signed 
when the package is taken and the certificate of deposit surrendered. 
These Conditions and Regulations read as follows: 



174 



TRUST COMPANIES. 



DATE. OF 
ACCESS TO 
PACKAGE BY 
DEPOSITOR 






PACKAGE 
TEMPORARILY 
REMOVED AND 
CERTIFICATE 
SURRENDERED 
BY OEPOSITOR 


PACKAGE 

RETURNED 
AND CERTIFI- 
CATE RE 
CEIVED BY 
DEPOSITOR 


THE UNDERSIGNED HEREBY ACKNOWLEDGES TmE TRANSACTIONS 
INDICATED BY THE HEADINGS OVER THE DATES RECCROED 






Sh3t^v^z^ (J^mrujn^/ 






\^JrJ<^-^vv^JLsdL U&VT~L<rv\/ 


%&joS 


'fa/oS 


>=TCXr>v^v_£^£_ U&T-V-LAsr^/ 


t - z — / 




^C^y^ULsdu ^hnrw->\/ 















Fig. 103. — Package Record. 

1. It is agreed by the depositor that no money, certificates of stock, 
registered or coupon bonds or other negotiable securities are contained in 
this deposit. 

2. In case of loss of deposit through its fault or negligence, the 
option is reserved to the company of either paying for it, at the valuation 
specified by the depositor, or of replacing it in kind or amount. 

3. This certificate is not transferable except by assignment endorsed 
hereon and approved by the company. 

4. If the whole or any part of this deposit shall be withrawn before 
the expiration of the specified period, no portion of the charge shall be 
returned, and if continued longer, it shall be deemed a renewal of the 
deposit on the same terms, for which a like rate shall be chargeable. 

5. This certificate must be presented upon the withdrawal of the 
deposit or any part thereof. 

These receipts are bound in book form, and are numbered consecu- 
tively. 

RENTALS, RENEWALS AND SURRENDERS 



Dale 

Mas- 


V 1 

oi 

Safe 


Name 


Address 




No. 
of 
Mos 


Rate 


Amount 


When 
Paid 


21 


z S 


z J 


Total Cash 


Remarks 


<U~, 


lb 


11 I 


L^JJo-iaa^ 


siXUud 






/-> 


v" 




v5 




















J 




(f 


OStlLr^.tfrv 


V 
UI4 <2<>^~ 


, 




12 


to 




±c 
























212. 




m-h-s" iu^r 1 






1 X 


,1 


SO 


7 


ro 






















r 1 


'l*YV<rW<N C-TV 


H 0.x^-L^ 




































f,(o 


4-1 &M-XUA 


"X \ Utvwiwnvk^SK 






L 






sc 








^ 




/ 


r : 'j 


S'O 





























































































































































-- 


— - 




1 






| 






















1 









Fig. 104. — Rental, Renewal and Surrender Book. 



FORMS FOR SAFE DEPOSIT DEPARTMENT. 



175 



The stub of this receipt should contain the same description of the 
package as that given in the body of the receipt. If the package is left 
for a longer period than that provided for in the certificate of deposit, 
upon payment of the rent for the longer storage, a renewal receipt is given 
in the form shown in Figure 101. At the time that the customer receives 
his certificate of deposit of the package, he signs a receipt for same, in 
the form shown at the top of Figure 102. This form, which is similar to 



Daily Report. 



SAFE DEPOSIT DEPARTMENT. 



• flUn\A- A 



SAFES RENTED 



PACKAG£5"RECe»VED 



*k* 



Dn 



3X 



t*s 



ItUXt^l U\, O.R-CA.7V./. 



J/vn 



22 



w^Jji 






lo. 



a/ 



v^W. 



SAFES SURRENDERED 



packages surrendered 



^-a-a^ 



V>1 L^x. Ms, 



S. 



P^n^-x^v V U 



COMPARATIVE STATEMENT OF SAFE RENTALS 



COMPARATIVE STATEMENT OF PACKAGES STORED 



SURRENDERED 



TOTAL STORED. 



,.-'— 



xo 



AHS- 



1 I IX 



goo 



STATEMENT OF EARNINGS 



±£ 



1L 



iVHBEHT tftRHIMM-f APES 



3Q-S- H. 



1° 



J£l 



. ^ Z. 



6v5" 



TOTAL t 



3 3 01. 



JJA 



""»!■ fUH AMD UNPAID | /f *7 C — 



DAILY ATTENDANCE 



Z<£~ 



-VAULT V*TO«t- 



'•"■' 'r^.u 



Itk 



^2, 



24. 



IS 



,4. 



HiOMEM't MOM 



H-o 



xsr 



xlte 



IS13 



Fig. 105. — Daily Report. 



that used for the receipt for keys to a safe, shown in Figure 89, also 
provides for the appointment of a deputy, and contains places for the 
description of the depositor and for that of his deputy, and other informa- 
tion as shown. On the back of the card — which is 6 by 4 inches in size — 
provision is made for the history of the package from the time it is received 
by the company until it is finally delivered. (See Figure 103.) 



176 TRUST COMPANIES. 

The ledger card for the record of cash transactions regarding packages 
left for storage is practically the same as that used in the renting of safes, 
shown in Figure 94; the only difference being that the words "Package 
No. " are substituted for the words "Safe No. ." It is custom- 
ary, however, to have the two sets of cards of different colors. 

Some companies use what is called the "Rental, Renewal and Sur- 
render Book," a form of which is shown in Figure 104. This is intended 
to give a running account of the business done by the department. It 
shows the business transacted during any given period, and provides a 
means of comparing the growth of the company from time to time. 

This department sends to the general bookkeeper a daily report, which, 
together with the reports from all of the other departments, is placed each 
morning on the desk of the President or the executive head of the com- 
pany. This report shows the number of safes rented during the day, the 
number surrendered, the number of packages received and the number 
surrendered, a statement of the number of visitors to the vault during the 
day, and a comparative statement of the number of safes rented, packages 
in storage and current earnings. A form of such a report, adapted, of 
course, to the needs of the company which uses it, is shown in Figure 105. 
Monthly, semi-annual and annual statements of the same character are 
also prepared. 



CHAPTER VIII. 
FORMS AND RECORDS FOR THE BANKING DEPARTMENT. 

AS has already been stated, the business of the banking department 
of a trust company differs little from that of an ordinary state 
bank, with the exception that trust companies in many states are 
forbidden to discount commercial paper. As a consequence many of the 
forms and records used by state banks, and also some of those used by 
national banks, are adapted to the use of the banking department of the 
trust company. Such forms and records have been treated at length in 
several excellent books on the subject and in current periodicals; so that 
in treating of them here it is necessary to travel over a fairly well-beaten 
road. However, each year sees introduced into our banking institutions 
new forms and devices, and he who would keep abreast of the times must 
be ever watchful for the latest improvements. The up-to-date systems 
of bank accounting involve many time and labor-saving plans, some of 
which are regarded by the old-time banker as sacrificing safety and com- 
pleteness to speed. Loose-leaf records, card systems and the doing away 
with the use of intermediate journals have largely supplanted the old 
systems in many banks; while others regard these innovations with sus- 
picion if not with open hostility. Experience, however, seems not to 
justify the fears that many bankers hold regarding new methods. 

The modern trust company is equipped with many devices which 
lighten labor, save time and insure greater accuracy and neatness. 
Prominent among these are the typewriter and the adding-machine, 
without which the enormous amount of business done each day by the 
large institutions would be difficult if not impossible. A great profusion 
of other time and labor-saving devices are used, — rotary letter-copying 
machines, filing-cabinets, manifolding devices, interest tables, coin-trays 
and counters, check-protectors, rubber stamps, etc. 

While there is a general similarity in the forms used by different 
companies for given purposes, slight variations from standard forms are 
so numerous that it would be quite impossible in such a sketch as this to 
include all good forms that are in use. In selecting the forms to be 
given here, as in selecting those already given for other departments, the 
writer does not intend to imply that other forms may not be as good. 
It should, perhaps, also be remarked that throughout this work the writer 
has usually avoided New York city forms, because the business of banks 
and trust companies in the metropolis is in some respects different in its 
requirements from that of those located in the smaller cities and in the 
towns in different parts of the country. 

177 



178 



TRUST COMPANIES. 





Pioneer Trust Company. 




<& 




j x n _a _ — * 




1 


i/ WOxC^i^oyC^K 




2 






O 




3 











A&fges 



3//f 2^^ ^ 



Qccapatioa ^— ' ^ 



tf** 



C-^aO-^ 



Introduced by U^g-^j, C/ rc 



JC£^ 



Tel. No. ^KgL^ ^H~^ i 



Closed 



5M-7"©* T»577° YAWMAN A CRBE MFQ- CO., ROCHESTER AMD CLEVELAND 

Fig. 106. — Signature Card. 



Forms for the Use of Customers. 

When a new customer opens an account, the first form needed is the 
signature-card, upon which he writes his signature to be used by the 
company as a means of identifying his checks. The card, a form of 
which is shown in Figure 106, should also contain his address, and other 
information as shown in the figure. These cards are filed alphabetically 
in cases with guide-cards at frequent intervals ; the cases being placed in 
such a position as to be easily accessible to the paying tellers and to the 
bookkeepers. Some companies take two or more signatures from each 
customer, so that the signatures may be filed in places convenient to the 
different workers who may have to refer to them. Formerly signature 



PROCURE SIGNATURE OF 



Iaj^ (£. ( 



JLtrry^JU 



< 



RESIDENCE- 



n\ 6**)- u^Qj*,. 



REMARKS 



'M 



4- 



&*^>->^slJL 






^date ^ / OJO( n 



tM* 9Loar-*(iNtc«t co cn'i » » e » 



Fig. 107. — Dummy Signature Card. 



FORMS FOR BANKING DEPARTMENT. 



179 



books were used instead of cards; but, except in very small companies, 
the advantages of the cards are so many that they are rapidly displacing 
books for this purpose. It sometimes happens that the signature of the 
new depositor cannot be obtained at the time the account is opened. In 
such case, a signature-card is sent to him to be signed and returned to 
the company; and in the meantime it is a good plan to have a dummy 
signature-card, like that shown in Figure 107, which is filed in the proper 
place with the regular signature-cards until such time as the signature 
is obtained. The use of this card, which should be of different color from 
that of the signature-cards, serves as a constant reminder that a signature 
is missing, and also makes the signature file a complete index of accounts. 



THE 

UNION TRUST 

PALMYRA 

DEPOSITED 


COMPAQ 

, PA. 
BY 

ft 


IY 

190 V 


. 10- 








PLEASE LIST EACH CHECK SEPARATELY. 


Currency 




/7<f, 


Gold 


1 


xo 


Silver 




1 U\2.^ 


Checks 


. 37 \l<$ 


1 


U-\\8\ 




1 


t 2.\ t l£~ 




i 


<?!tf3 


:?£" 6o 2 






i< 




;! 

i 










_J 








_ "• 








! 




Total $ I 


i 



See that all Checks and Drafts are Endorsed. 

Fig. 108.— Deposit Slip. 



The customer is next provided with a pad of deposit tickets, one of 
which he fills out for his first deposit, with help from the new accounts 
teller if necessary. A customary form of deposit-slip is shown in Figure 
108. Figure 109 shows another form providing for the separate listing 
of checks on local banks. For customers whose deposits are apt to 
include long lists of checks, larger slips in much the same form arc pro- 
vided, double columns for amounts often being used. 

The customer is next given a pass-book, in which is entered his name 
and the date and amount of the first deposit. It is a great convenience 
to have the customer's name written on the front cover of the pass-book, 
and this is usually done. The pages in the old-style pass-book, still used 



180 



TRUST COMPANIES. 



in many institutions, particularly in the East, are usually ruled as shown 
in Figure 110, the deposits being entered, as debits to the trust company, 
on the left-hand page ; and the checks being entered, when the book is left 
to be balanced, on the right-hand page, as shown in the figure. It is now 
more common, however, to list the checks on an adding-machine, entering 
in the pass-book only the total of the checks, and subtracting such total 
from the footing of the deposits to show the balance. In such case the 
pages of the pass-book are not regarded as debit and credit pages; the 
book being simply a record of deposits, which are entered on either the 
left-hand or right-hand page of the book when the previous page is filled, 
as is shown in Figure 111. Rubber stamps are used to insert the words 
"total checks paid" and "balance," and the lines, when the book 
balanced. 



is 



DCPOSITED WITH 

The Merchants' Loan & Trust Co. 

FOB ACCOrKT 



,.£„s, 



s 



ZZXA^k. 







Chicago, •- 


c kL ey r^JLlO , 


90-K... 


Currency, 
Gold, 


DOl 


1AMS. 

US 


CTS. 


Silver, 




}(o 


%ST 






4.4- 

*H 

9 




CHECKS ON CHICAGO BANKS. 








$1 

/..5L 


3.*L 


13... 




03 














a.;L-T 

















Fig. 109. — Deposit Slip. 



Several different sizes of pass-books are usually kept in stock to 
accommodate accounts of all degrees of activity, the rulings of all pass- 
books being the same, following either the form shown in Figure 110 or 
that shown in Figure 111. Some companies provide special pass-books 
for the use of women customers, of size small enough (about 3*4 DV 2 % 
inches) to be carried in a woman's pocket-book. 



The 

American 

Trust 

Company 



HI ACCOUNT With 



if- 



L 



■*H» 



LL 



a_k 



zJi 



T„t, J CKecfeTa/ul 



3a.lance 



ilUl 



ZZR 



/a-7 



4-3 



kM 



4£u& 



4>-3£ 



V&: 



1±L 



LA. 



Lit, 



u= 



£-2- 



2^ 



1± 



zz uJ 7 ' 11 1 5 



34 



L2£ 



3 I 



m 



S-Q] 



I O 



to 



lf& ~- 



kl&$ 



±0 



3^£^£ 



^34 



n 



%&. 



Fig. 110. — Pass-Book, with Debit and Credit Pages. 






FORMS FOR BANKING DEPARTMENT. 



181 



Depositors very frequently forget to bring their pass-books when 
making a deposit. In such cases it is convenient to have a form of dupli- 
cate deposit-slip to hand to the customer in lieu of the entry of the 
deposit in his pass-book. Figure 112 shows one form of a duplicate 
deposit-slip. Instead of using such a form, however, many receiving 
tellers simply use a regular deposit-slip on which they copy the total 
from the slip handed in by the depositor, write the word "duplicate" and 
sign their names or initials. Sometimes a rubber stamp with the words 
"Duplicate. Teller" is used. 

The next need of the depositor is a check-book. It is usual to have 
in stock several varieties of these, from books containing fifty checks of a 



THE CITY TRUST CO., 



tn account with 



S-^hrjct^fiio^. Cctco^un^Llj 




Fig. 111.— Pass-Book. 



size suitable for carrying in the pocket to desk check-books containing 
three hundred or five hundred checks, three or more on a page, and 
sometimes even larger ones. The customer selects a check-book in accord- 
ance with his probable needs. If his account is to be of a considerable 
size, he leaves his order for the preparation of a book of checks on which 
are to be printed his name and business. This is often provided by the 
company without charge to the customer. The form of check which has 
come to be most common is shown in Figure 113, which also shows the 
check stub. In some checks the place for the number of the check is at 
the left upper corner, and in others in the left lower corner. Of more im- 
portance is the position of the figures showing the amount of the check, 



182 



TRUST COMPANIES. 



that shown in Figure 113 being the result of an evolution in check forms, 
and being that which is by general consent regarded as the most con- 
venient. This position for the figures is quite as convenient as any other 
for the person writing the check; while for the bank clerk who has t»* 
read off rapidly and accurately the amounts of a bunch of several hun- 
dred checks it is emphatically the most convenient place. As he holds the 



AMERICAN 

TRUST COMPANY Baltimore, mo. )wL 3 ^lo 



o 

H 
to 

£ 

LU 
Q 

ui 
H 
< 
O 
_J 
Q. 

Q 



)(o 



HAS THIS DAY RECEIVED A DEPOSIT OF $ v3 g<Op" 



.FOR CREDIT 



TO ACCOUNT OF 



MEMORANDUM. 




. (Xgtq^vv^L 



» cS. ^O^yxCL^^e 



B54-25.7-05 



This Ticket Must bs RsTUBNab for Entity in Pass Book. 



Fig. 112. — Duplicate Deposit Slip. 



bunch of checks with his left hand and turns the checks with his right 
hand, the amounts of the several checks as given in figures are easily 
read by him if in the position shown in Figure 113, and are easily com- 
pared with the written amount of the check. If they appear at the left 
end of the check, it is necessary for him to turn each check to read the 
amount in figures. It would be a great boon to the workers in banks 



M3*q. 






Fa r \tu j <zJ- Sj^ru-i^-n 



2.13 



TO 



"j 

P I- 

; u 

7 i 

A* 

h z 

- o 



XEHABK.X. J- - M^rsjL 7, —190 .4 N° A ■*<? 
Pay to the order of UScJU^ P^ <^ . (B/lgww -^--w-^- $D / 3?° 



-1A 



Fig. 113. — Check, with Stub. 



and trust companies if this position for the figures were universally 
adopted on all checks and drafts. 

Check-books are usually made up with a stub for each check, for the 
purpose of enabling the customer to keep a record of his checks on the 
stubs, although separate sheets for such records are sometimes inserted 
in the check-book. One of the most common forms of such stubs is shown 



FORMS FOR BANKING DEPARTMENT. 



183 



with the check in Figure 113. Figure 114 shows another form frequently 
used with pocket check-books. That shown in Figure 113 is specially 
useful where three or more checks are bound on each page, as the amounts 
of all the checks on the page, being extended in the column at the right, 
may be easily footed and carried forward to the next page. A record 
of deposits and any other memoranda such as the customer's reconcile- 
ment of the account at the end of the month, may be kept on the backs 
of the stubs. 

It is customary to provide "counter checks" to be used only by the 
customer in person for such purposes as drawing for cash, for a draft, 
etc. Two forms of such a check are shown in Figure 115 and Figure 11 6. 
Sometimes the ordinary check of the company, with the words "Counter 
Check" printed on it in large type, is used for this purpose. 



C- 



4/ 



'W: 



32 



% 







/3j2^r\r-CC&<L' 



ZM 6mtjgM/dmawl,, 
dfmjk d£fwMeols, 

/WmrriedferH'wrM. 



Dollars. 


Cents. 


^7<f 


i& 


SLt> O 




link 


1 (o 


^1 3 


q o 


7 t* + 


H- (d 



Fig. 114. — Check Stub. 



Voucher Checks. 

The use of voucher checks is steadily increasing, and it is of 
importance to the banks and trust companies to encourage the use 
of the best forms for such checks. Many of the forms in use are exceed- 
ingly cumbersome and there is a decided lack of uniformity in them. 
The name of the paying bank, the amount of the check, the places for 
receipt and for endorsement, are found in all conceivable places on the 
check, so that the bank clerk who has to handle them often loses valuable 
time that might be saved if there were a uniform style of voucher check 
devised with a view to convenience in handling. Another objection to 
many voucher checks is that the bank is held responsible for the signa- 
tures of a number of different persons which appear on the check. It 
is unreasonable to ask the bank to be responsible for more than two such 
signatures ; if the concern issuing the check considers it necessary to have 



184 



TRUST COMPANIES. 



>i 

z 
o 

UJ 

CO 

3 



O 

o 

© 




/ 2f- j00 t 









cr 

Ml III ^ 

CO H - £ P= 

3 Z CO 5 



g 




^ 
^/.>> 



^^u=^J^rn±or^z 



Fig. 115. — Counter Check^ Receipt Form. 



more signatures on the document, the official who signs last should be 
responsible for the previous signatures, the responsibility of the bank 
ceasing with the final or at most with the last two signatures. Other 
objections to many voucher checks are the stating of conditions of pay- 
ment which put in doubt the negotiability of the instrument, and the 
requirement of both a receipt and endorsement from the payee. Whether 
the receipt adds anything to the endorsement of the check is, to say the 
least, a matter of doubt; and it certainly adds much to the labor of 
handling the check. 

Another thing to be noted about voucher checks is that the folded 
check, which is a great nuisance to the banks, is often used when a single 
piece of paper of the size of an ordinary check, or a little larger, would 
answer the purpose fully as well. It is possible to provide room on the 
face or back of the check for such detailed statement of account as is 
usually considered desirable on a voucher check, as is proved by several 
good forms of such instruments that are in daily use. Figure 117 shows 
an excellent form. Its size is 8% by 3% inches — only a little larger than 
the ordinary check — and yet statement space is provided of ample width 
and with seven lines for items. The back of this check is plain except 
for the words, "Endorsement by the payee is acknowledgment of full 
payment and satisfaction of the within account." Another form, giving 
less space for the statement, is shown in Figure 118. Figure 119 shows 



O 
UJ 

</> 

OS 
UJ 



O 
o 

oc 

o 



' LlI 



i ° < o 



^Xay >^Xu 



-Xf^ J.9tfi 



if) D Z 



O iu > 



0&%ty»fr4fr NOT NEGOTIABLE- 

>, cd uj ? ° : 



>■ z 
.0 o 

U\S) 



"Off 
h I <C Z Ul 
< h 00 < Q. 



m<&* 



v Cuj^Al T~. UJ^-zrwyx^ 



Fig. 116. — Counter Check. 



FORMS FOR BANKING DEPARTMENT. 



185 



aS- 



.0 " - 



The Market and Fulton National Bank of New York 


No. 




















































































































■ 








































""" 




~ Vl""™ 

























OENERAL CHBnOAL COMPANY 



Fig. 117. — Voucher Check. 



mmmm 



m i mmm* 



IH ' J.Mlllll I 



d(cve(att6.0 $o 



^*$ibt^o*oerof. 



'^c((at$. 



T* THE NATIONAL COMMERCIAL BANK 
CLEVELAND, O. 



\W6«rJto^ 



3lca«\v«6j'rom Sij« <iftu«rpt^e Jhrintiticj <!!». 



(tye ^.oyc cfjccft in payment o.f_ 



2MHC 



£ign Bore . 



Fig. 118. — Voucher Check. 



Ak 



PeveBluff^Ark. 



-/90- 



THE WESTERN TRUST COMPANY 



^af/* 



<Z4A- 



THE SANTA CLARA COMMERCIAL CO. 



o r . 



*. ft- 



THIS CHECK IS OIVtN IN SETTLEMENT OF ACCOUNT AS PER STATEMENT ON MAROIN. 



Fig. 119. — Voucher Check. 

a form having provision for a statement at the end of the check. These 
forms show three possible places on the face of a check for the statement. 
It is also possible to provide for the statement on the back of the check, 
as shown in Figure 120, which represents the back of the check whose 
face is shown in Figure 121. 

13 



186 



TRUST COMPANIES. 



It is certain that by the use of forms similar to these the necessity of 
folded voucher checks could often be avoided. There are concerns, how- 
ever, the nature of whose accounts seems to require the folded form of 



Date. 




Amount. 
$ 














This check is in full payment of the 
above account and the payee accepts 
it as such. 

Endorsements. 

No other receipt is necessary or 
desired. 



Fig. 120. — Back of Voucher Check. 



No. 121. EDGEWATER, N. J., 190 

Palisades Trust and Guaranty Co. 

Examined and 

registered. OF EN&LEWOOD, N. J. 

$ 

Auditor'." PAY to the orueb of 

DOLLARS 

Countersigned 

New Jersey ami Hudson River Railway and Ferry Company. 

vice-President. Treasurer. 

Fig. 121. — Face of Vouchee Check. 



FORMS FOR BANKING DEPARTMENT. 



187 



c >. 

6= 



LLJ 




ALLISCHALMERS COMPANY No._6002_„ 



GENERAL OFFICES. 

Home Insurance Blds 

Chicago.Ill 



Upon the pavee executing in ink 
tne Receipt on left end of this Voucher- 
Check, and endorsement on back 

PAY TO THE ORDER OF 



Dollars 



to COMMERCIAL NATIONAL BANK 
CHICAGO. ILL. 



Allis -Chalmers Company. 



COUNTERSIGNED 



O 



-o — o- 



£«o V ICC PRESIDED 



Fig. 122.— Face of Folded Voucher Check:. 



voucher check. In such cases the convenience of the banks which must 
handle the checks would be greatly conserved if all information needed by 
the bank were to be found on the outside of the check when folded. It 
ought not to be necessary for the bank clerk to unfold a voucher check 
as he handles it with other checks in the regular course of business. The 
desired result can be accomplished by making the front of the folded 
voucher a regular check form, and having all endorsements appear on the 

ALLISCHALMERS COMPANY 



VOUCHER -CHECK 



To. 



STATEMENT 



DATE 


DESCRIPTION AMOUNT 


AMOUNT. 








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i 
















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i 






























,(-.- . , — , . 

Account and extensions correct Approved for payment 


CHIEF ACCOUNTANT COMPTROLLER 



Fig. 123. — Inside of Folded Voucher Check. 



188 TRUST COMPANIES. 

back of the folded voucher. Figure 122 shows the face of one of the 
best forms of folded voucher checks in use. It will be noticed that this 
has the appearance of an ordinary draft-form check. The other side 
of the folded voucher is blank save for the words at the top, "Make all 
endorsements here." The information needed by the bank is all on the 
outside of the folded voucher, so that the bank clerk is not put to the 
necessity of unfolding this document. Although a receipt in addition to 
an endorsement is required, such receipt appears on the face of the check, 
at the end, where it is easily seen. Some voucher checks of the same gen- 
eral form as this one do not call for a receipt, the endorsement being 
considered all that is necessary. In such cases the check usually reads, 

"When properly endorsed, pay to the order of " etc., "In full 

payment of the within account." From the standpoint of the bank this 
is of course an improvement over the form which requires both a receipt 
and an endorsement; while, as already suggested, it is doubtful whether 
the drawer of the check gains anything by having the receipt in addition 
to the endorsement. Figure 123 shows the inside of this voucher check 
when unfolded. 

Teller 's Records. 

The different tellers keep records of their daily work and prove 
its correctness on books or sheets of paper variously known as "scratch- 
es," "settlement books," or "proofs." In its original form this record 
was merely a rough memorandum used by the teller to balance his 
cash, containing simply lists of items on which cash was received 
or paid, and the cash count. This is all that is needed in a small 
bank having only one teller and one bookkeeper, for in such case the 
keeping of a complete proof such as is described below is merely a dupli- 
cation of the work of the bookkeeper. But in a large institution having 
a number of tellers and bookkeepers the system of proofs should be such 
as to test the accuracy of each man's work in its relations to the work 
cf every other man in the institution. Such systems are now in use in 
the most progressive companies, and have put an end to the continual 
"checking back" to locate errors and strike a balance of general cash, 
which was and is a burdensome feature of the work in banks where a 
general system of proofs is not in use. 

The particular form of the proof for each teller or bookkeeper will 
of course depend upon the number of such workers and upon the general 
arrangement of the details of the work of the company; but the principle 
upon which the system of proofs here described is based will apply to 
any institution, no matter what the number of workers or the arrange- 
ment of the work. This principle is, that the proof of each worker 
should contain a separate list of the items received from or delivered 
to each of the other workers. This is illustrated in figures 124 to 127, 
from a study of which the system will be made clear. 73 On the Receiving 



73 See also Figure 146. 



FORMS FOR BANKING DEPARTMENT. 



189 



Tellers' Proof, figure 12-1, left-hand page, the first columns provide for 
the listing of "Commercial Credits/' i. e., deposits received for checking 
accounts. Space is provided for the separate listing of each deposit; 
but instead of this the teller has here made use of the adding-machine, 
his assistant having taken the deposit slips received, at frequent intervals, 



RECEIVING TELLER CASH PROOF 





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Fig. 124. — Receiving Teller's Proof. Left-Haxd Page. 



listed them on the adding-machine and entered the totals on the proof. 
By reference to Figure 127, under the heading "Deposits" at the right 
lower corner, it will be seen that the Individual Bookkeepers' Proof 
debits the receiving teller with the same total as here shown credited to 
"Com'l Credits," $1,230,068.77. Under "General Book Credits" is given 



190 



TRUST COMPANIES. 



a list of all credits for the general books passing through the hands of 
the receiving teller. The total of these items agrees with the total of 
debits to the receiving teller on the proof of the general bookkeeper. On 
the right-hand page of Figure 124, the total of "Commercial Debits/' 
$173,586.52, will be seen to agree with the total listed to receiving teller 



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Fig. 124. — Receiving Teller's Proof, Right-Hand Page. 

under "Items on Us" in the Individual Bookkeepers' Proof (Figure 127). 
Here again the teller has entered on his proof adding-machine totals of 
the items, instead of listing each item. Referring again to the right- 
hand page of Figure 124, it will be seen that the items and the totals 
listed under the heading "C Paying Teller, Dr." agree with the items 



FORMS FOR BANKING DEPARTMENT. 



191 



listed to the credit of the receiving teller on the left-hand page of Figure 
125. If all the proofs in the system were here shown, it would be seen that 
the list of debits to each worker on the receiving teller's proof appears 
on the proof of such worker as a list of credits to the receiving teller, 
and vice versa. It is therefore evident that if any teller or bookkeeper 
fails to balance on completing his proof, he has but to compare his proof 
with those of the other tellers or bookkeepers to locate his error. If, 
for example, on the left-hand page of Figure 125, the paying teller had 



PAYING TELLER CASH PROOF 



■ | e*SH | ITCMS 


Ore* Telle* CR. 


C RWa T«hfCH 


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Fig. 125. — Paying Teller's Proof, Left-Hakd Page. 



failed to credit the receiving teller with the $6.30 item, his proof would 
show a total credit to receiving teller of $10,152.57 instead of $10,158.87, 
and consequently his total of "Debit Cash" would be $6.30 less than the 
total of "Credit Cash," showing an "over" of $6.30. On comparing his 
proof with that of the receiving teller, the error would be easily located. 
Under the same conditions, without a general proof system, this little 
item of $6.30 might cause the loss of several hours' time in "checking 
back." It is evident, too, that such a system as this enables each worker 



192 



TRUST COMPANIES. 



to complete his own work as soon as he has proved its correctness, in- 
stead of all the workers being delayed by the error of one, as is often 
the case where no general system of proofs is used. The writer has seen 
the introduction of such a proof system in an old institution result in 
every man being able to leave the bank with his work done at about five 
o'clock, whereas under the old conditions it had been the custom to "check 
for cash" until a late hour in the evening every few days. 













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Fig. 125. — Paying Teller's Proof, Right-Hand Page. 



Referring again to Figure 124, at the close of the day the work is 
summarized by entering the totals of the various columns on the left- 
hand page under the heading "Debit Cash," and the totals of those on 
the right-hand page under the heading "Credit Cash." If the work is 
correct the totals of these columns will agree, as shown in the figure. If 
they do not agree the teller proceeds, as already 1 suggested, to compare 
the totals of the columns of his proof with those shown on the proofs of 
the other tellers or bookkeepers, and thus soon finds the mistake. 



FORMS FOR BANKING DEPARTMENT. 



193 



The actual count of cash at the close of the day is sometimes listed 
on the proof, and sometimes listed on separate sheets of paper, which 
are preserved for some months. In the latter case the total count only 
is entered on the proof, as shown on the left-hand page of Figure 125, 
the first item under "Credit Cash," where the paying teller has entered 
his cash count total, $66,303.71. On the right-hand page of this same 
figure the teller has gone to the pains of recording the names of the 
drawee bank and the last endorser of each check cashed by him. This, 
of course, involves some work, but is evidently a valuable safeguard. 









GENERAL CASH 


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CLEARANCE ^ 


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Fig. 126. — Summary of Gekeral Cash. 



Figure 126 shows the "general cash" statement made up by the pay- 
ing teller at the close of the day, showing the total cash, cash items and 
clearance, and their distribution among the various tellers. 



The Individual Books. 

The Individual Bookkeeper's Proof, which is a part of the general 
system of proofs, is shown in Figure 127. Like the other proofs men- 
tioned it is of course devised with a view to the particular needs of the 
company using it. The accounts are divided alphabetically into four 



194 



TRUST COMPANIES. 



groups,, as shown on the proof, A to D, E to J, K to R and S to Z. Under 
the headings named the proof shows the total checks for the day against 
each group. These are summarized at the right lower corner of the 
figure, showing a total of $1,831,604.92, which agrees with the total 
shown under "Items on Us," which gives the same items arranged ac- 
cording to the sources from which they came. The first totals under the 
headings "A to D," etc., are those of the checks received from the clear- 
ing-house. These are carried to the places indicated under the heading 
"Summary" at the left lower corner of the figure, where is given the 

INDIVIDUAL BOOKKEEPER'S PROOF. 



GENERAL BOOKS 



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Fig. 127. — Individual Bookkeeper's Proof. 



proof of the "Clearance." Provision is made for the listing of the inev- 
itable corrections of the clearance lists. The column headed "Items Out' 
is for the listing of items received by the individual bookkeeper in the 
clearance, but which belong not on the individual books, but on the gen- 
eral books, savings books, etc. The proof of the credits on the individual 
books is shown just above that of the debits at the right lower corner of 
the figure. The total of the adding-machine list of deposits received by 
Ihe receiving teller is placed at the top, and with this must agree the 
totals of deposits shown on the ledgers. 



FORMS FOR BANKING DEPARTMENT. 195 

The Boston Ledger. 

For the keeping of individual accounts the system probably most 
common is that of using the "Boston" combined journal and ledger for 
the more active accounts, together with a journal and balance ledger for 
the less active ones. As in the case of other banks, however, local condi- 
tions and the prevailing character of the accounts, together with the per- 
sonal preferences of the officers, result in the choice of different methods 
of keeping the individual accounts in different companies. On the aver- 
age the commercial accounts of trust companies are apt to be less active 
and of smaller balances than those of national banks. 

The "Boston Ledger," a form of which is shown in Figure 128, is a 
combined journal and ledger. The entries are made directly from the 
deposit slips and the checks. The open book shows the work for one 
week, that for the first three days being on the left-hand page, and that 
for the last three days being on the right-hand page. Figure 128 shows 
only the left-hand page. The right-hand page is ruled in the same way, 
with the headings Thursday, Friday and Saturday, but usually does not 
contain a column for the names of depositors, the line for the account of 
each depositor being followed across the two pages without repetition of 
the name by the help of the numbers, which, as shown in the figure, are 
repeated for each day. A further aid in this matter is to have the trans- 
verse lines ruled in two or three different colors. In the sample from 
which Figure 128 is engraved, the first line is ruled in purple ink, the 
second in blue and the third in red; these colors being repeated in the 
same order throughout the page. Some companies have the name re- 
peated on the second page as an additional help in following the proper 
line for each account. In making up the book it is customary to have 
three out of every four pages cut "short," omitting the column headed 
"names," so that four weeks' work may be recorded without rewriting 
the names. A convenient plan is to have these short leaves cut just after 
the figures in the column immediately following the list of names, and 
the page creased at the heavy line just after the first balance column. 
Then by bending over this first balance column the balances for Satur- 
day are extended therein, so that when it is folded back again the bal- 
ances appear just before the work for the following Monday without 
copying. The method for proving the work for each day on each page 
of this ledger is simple. If the work has been done correctly, the total 
of the balance column for the preceding day, plus the total of the de- 
posits column and minus the total of the total checks column, must equal 
the total of the day's balance column. 

While the form of Boston Ledger shown here is probably the most 
common one, several variations from it are often found. Many companies 
prefer to have the deposits column follow immediately after the balance 
column, so that the bookkeeper may more readily "extend" the balances 
in his head, the principle being that with this arrangement he can more 



196 TRUST ( 


:c 


►MPANIES. 

Mdnday. (Li* 


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Checks in Detail 


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Fig. 128. — Boston Ledger. 



easily add the deposits to the previous balance and subtract the total 
checks from the sum of the two. This process is a rather puzzling one 
to the novice, but the experienced worker on the Boston Ledger does it 



FORMS FOR BANKING DEPARTMENT. 



197 





Tuesday. 


CLw, 






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Wednesday, 


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BALANCE 


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Fig. 128. — Boston Ledger (Continued), 



with ease. The older forms of Boston Ledger provided both a debit and 
a credit balance column, and this form is still in use. The more common 
plan, however, is to have the debit balances appear in red ink, so that 
only one balance column is needed. In the larger companies the names 



198 TRUST COMPANIES. 

of the customers are usually printed in, thus saving the bookkeeper much 
tedious copying. The size of the page is usually about twenty-two inches 
wide by eighteen inches deep; the number of accounts on a page varying 
from twenty to forty, depending upon the depth of the page and the 
space between the lines. The accounts are arranged in alphabetical 
order, several lines being left after each letter for new names that may 
need to be added. In large banks each ledger contains the accounts be- 
ginning with certain letters of the alphabet only: e. g., one contains ac- 
counts whose initial letters are from A to K, and another those whose 
initial letters are from L to Z. The letter "B" appearing after several 
of the balances in the figure indicates that the pass-books of the custom- 
ers indicated were balanced on the dates shown. A check mark (V) is 
often used for this purpose, instead of '*B." 

The Boston Ledger has some decided merits and some distinct de- 
fects. Its merits include the great saving of time and labor in the com- 
bining of journal and ledger, which does away with posting; the readi- 
ness with which the total day's work may be proved; the grouping of all 
the accounts on a few pages, making it easy to compare the balances in 
different accounts; the prominence with which overdrafts appear, insur- 
ing that they shall not be overlooked. 

Among the defects of this ledger are the ease with which items may 
be entered on the wrong line and so be made to appear against the wrong 
account; the fact that it is comparatively difficult to ascertain the average 
balances that a given customer has carried for a series of weeks or 
months; and the fact that the balances of inactive accounts must be car- 
ried forward day by day along with those of active accounts. The size 
of the book is also considered objectionable by some. 

The fact that the Boston Ledger is not adapted to the carrying of 
inactive accounts has led to the introduction of the system already men- 
tioned, of using both a Boston Ledger and a balance ledger (Figure 130), 
with a special journal for the latter. The more active accounts are carried 
in the Boston Ledger and the less active ones in the other ledger, which is 
sometimes called the "inactive ledger," and sometimes the "petty 
ledger." The total of the balances in the petty ledger is carried as an 
account in the Boston Ledger, so that the total of balances in the latter 
shows the total balances for the whole set of books. 

Figure 129 shows a form of journal to be used in connection with 
the petty ledger, containing also a form for the proof of posting. This 
form of journal (or "scratcher" as some prefer to call it) is a great im- 
provement over the old form in which the deposits were recorded on one 
page and the checks on another, as the names of depositors having both 
deposits and checks need to be written but once, while nothing is sac- 
rificed in the way of clearness or completeness of the record. On the 
left of the page the first column contains the detailed list of checks and 
the second column the total checks against each account. Columns are 
provided for the check-marks used in posting. The first column at the 



FORMS FOE BANKING DEPARTMENT. 



199 



right of the page is for the listing of deposits; while the two other col- 
umns are for the proof of posting. This furnishes a daily trial balance 
of all accounts active for the day. In the first column are listed the old 
balances, and in the second column the balances shown by the ledger 
accounts after the day's items are posted. At the bottom of ihe "Old 
Balance" column is listed the total of the day's credits ; and at the bottom 
of the "New Balance" column, the total of the day's debits. Then, if 
the work has been done correctly, the footings of the two columns will 
agree. While this proof of posting adds somewhat to the bookkeeper's 
daily work, it insures the correct extension of balances, and lightens the 
task of the monthly trial balance of all the accounts in the ledgers. 







t*tt? Journal. 


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Fig. 129. — Journal or Scratcher, with Proof of Posting. 

A form of ledger used with the journal just described is shown in 
Figure ISO. This is a modified form of the "Cincinnati" or three-column 
balance ledger. As compared with the Boston Ledger, this has the ad- 
vantage of showing the balances of each account for a long period in a 
form that makes it convenient to see at a glance the average bal- 
ance; while the carrying forward of unchanged balances is avoided. 
This form may be used in either a bound book or a loose-leaf binder. The 
latter is preferable, because it permits the arranging of the sheets in 
alphabetical order, making an index unnecessary; and because each ac- 
count may be given as many or as few pages as it needs. The size of 
the sheet, exclusive of binding space for a loose-leaf binder, is about 
eleven by twelve inches. 



200 



TRUST COMPANIES. 



Another form of check and deposit journal is shown in Figure 
181. This is arranged much the same as the "Petty Journal" shown in 
Figure 129, but d »es not include the columns for proof of posting. The 
latter may be written, if desired, on separate sheets of paper; it may, 
by the exercise of a little ingenuity, be taken off on the adding machine; 
while some companies dispense with it altogether, relying upon the 
monthly trial balance to detect any possible errors in the computation of 
balances. 

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Fig. 130. — Balance L<edger. 



In some companies, particularly in the older and larger companies in 
the East, the old plan of having both debit and credit "scratchers" or 
journals is still in use. Under this plan the checks are listed on check 
scratchers, a form of which is shown in Figure 132, and the deposits 
are listed on deposit scratchers, a form of which is shown in Figure 133. 
In both of these forms, the columns at the right, not filled in in the fig- 
ures, are for the continuation of the work begun in the first columns, thus 
giving space for more entries -on each page. Often, however, only the 



FORMS FOR BANKING DEPARTMENT. 



201 



single ruling is included on each page. Various forms of ledgers are 
used with these scratchers, some companies still continuing the use of the 
old-fashioned two-column ledger, without a balance column — the ruling 
of the ledger being practically the same as that shown in Figure 133, 
with the addition of date columns on both debit and credit sides. In the 
newer companies, however, it is far more usual to employ one of the 
various forms of ledgers having balance columns. 



CnECKS IN DETAIL. 



_ DEPOSITS IN „ 
L.V. detail Total Deposits . 



(k-i.ti. 



Fig. 131. — Check and Deposit Joubxal. 



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Fig. 133. — Deposit Scratcher. 



A number of plans have been devised to lessen the labor of keeping 
individual accounts, the particular aim being to do away, so far as pos- 
sible, with the entering of items on both journal and ledger, the items 
being entered in the ledger directly from the original credit or deposit 
slips and from the checks. Figures 134 and 135 illustrate one set of 
forms devised with this end in view. The ledger, shown in Figure 135, 
is a modified form of Boston Ledger, involving some of the features of 
that ledger and some of the "Cincinnati" or three-column balance ledger. 
It may be either permanently bound or used with a loose-leaf binder, the 

14 . 



202 



TRUST COMPANIES. 



THE SAFE DEPOSIT A TRUST CO. OF PITTSBURG. PA. 



Cfmck ana Drposil J carnal, Setf-VroVing Trial Balance ' ll\CmUkCcU Lu^O. &> - 190J-f 



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Fig. 134. — Memorandum Check and Deposit Journal, with Tbial Balance. 

latter being more usual. The entries are made in this ledger directly 
from the deposit slips and the checks; and, as will be seen from the fig- 
ures, all the detail work is done in the ledger. As each account is posted 
in the ledger from the original items, the total debits and the total credits, 
together with the old and the new balances, are entered, from the ledger, 
in the form shown in Figure 134, which is an abbreviated journal com- 
bined with a proof of posting. Here, it will be noticed, the old practice 



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Fig. 135. — Individual Ledger. 



FORMS FOR BANKING DEPARTMENT. 



203 




JN ACCOUNT WITH 

'THE PRUDENTIAL TRUST 
_COMr 

Interest Account for.. ^LA&OfSJLs... .190^0. 



Credit Balance 



.28. 



,2$L 



M. 



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-44 



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We Credit et^ » , 

We Debit »t • . 

Amount Credited „ 

Fig. 136. — Interest Statement. 

is reversed — the items being posted from the ledger into the journal, in- 
stead of vice versa. The use of the so-called j ournal in this case is merely 
to record the total day's work in compact form, and to prove that all 
items have been entered in the ledger. In order to abbreviate the work 
as much as possible, the accounts under each letter of the alphabet are 
numbered from 1 up: those whose initial letter is A being numbered Al, 



204 



TRUST COMPANIES. 



A2, A3, etc.; those whose initial letter is B being numbered Bl, B2, B3, 
etc. In the journal (Figure 134) instead of the names of the accounts 
these numbers are entered as a means of identifying the items. When 
the work of the day is completed, this "journal" will contain the totals 
of all the credits and debits for the day; and if the work has been done 
correctly, the totals of the "Checks" and "Deposits" columns will agree 
with the totals of these items as shown on the proofs. At the same time 
the footings of the "Old Balance" and the "New Balance" columns, with 
the total deposits added to the former, and the total checks added to the 
latter, will agree and furnish a proof of posting in the same manner as 
was explained in connection with Figure 129. If several ledgers are 
used, as is necessary in the larger companies, one of these journals is of 
course used with each ledger. 

The custom of paying interest on daily balances on checking accounts 
which have satisfactory balances is a growing one. The terms on which 
interest is allowed vary somewhat in different localities, but interest at 
the rate of two per cent, per annum on daily balances of $500 or over is 
quite common. For the sake of convenience it is usual to compute and 
credit the interest about the 28th of each month. The interest statement 
is then ready to hand to the customer with his returned vouchers when 
his book is balanced on the first of the next month. Figure 136 shows a 
form of such an interest statement. It will be noticed that the balances 
are written in thousands and hundreds of dollars only, the figures in the 
units and tens columns being omitted. This method is followed in many 
institutions as a means of lessening the work, as it cannot in any case 
cause more than a slight difference in the amount of interest allowed. 
Sometimes the interest rule specifies that interest will be allowed on even 
hundreds of dollars only. 

Figures 137 and 138 show two forms of ledgers devised with a view 
to assist the bookkeeper in the computation of interest on accounts. In 
Figure 137, in the column headed "Days," is entered the number of days 
that each balance stands undisturbed. In the next column, headed "Ag- 
gregate," is placed the product of the balance and the number of days. 
The principle involved in the figuring of the interest is the same as that 
used in Figure 136; namely, that the interest on any given amount for X 
days is the same as the interest on X times that amount for one day. 



flA* O. -^ypjLsy^QJLAs 



i»,t-ju, umu-i.ij.iinjmu.ufi 



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Fig. 137. — Individual Ledger, for Accounts on Which Interest is Allowed. 



FORMS FOR BANKING DEPARTMENT. 



205 



Thus, on the first line of Figure 137, the interest on $2,517.50 for four 
days is the same as the interest on four times $2,517-50, or $10,070, for 
one day. Hence, if at the end of the interest period (usually the 28th 
of each month) the items in the column headed "Aggregate" be added, 
the interest for one day on the sum so obtained represents the correct 
interest on the daily balances of the account for the month. Figure 138 
represents the top portion of a ledger sheet which facilitates the compu- 
tation of interest, groups four accounts on each page, and shows on one 







A 


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Fig. 138 — Individual Ledger for Accounts on Which Interest is Allowed. 

page the balances of each account for one month. Down the first column 
at the left of the page are printed the numbers of the days of the month; 
the numbers beginning, however, with the 29th of the month, and extend- 
ing through the 28th of the following month. This arrangement of the 
numbers is due to the fact already noted, that it is customary to compute 
interest at the close of the 28th of each month; and the page represents 
the work, not of a calendar month, but of an "interest month." At the 
bottom of each of the four sub-divisions of the page is printed "Interest 
at ■ per cent., $ ." At the close of the month the balance 



Hog" 



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Fig. 139. — Trial Balance Book. 



columns are footed, and the interest for one day on the totals represents 
the interest for the month on the accounts. By the use of "short" leaves, 
cut at the top on the line just above the headings of the columns, the 
work may be continued for several months without transferring the names 
and balances. 

Whatever form of ledger is used for individual accounts a trial bal- 
ance should be taken once a month, except where the Boston Ledger is 
used, in which case the ledger itself furnishes a daily trial balance. For 



206 



TRUST COMPANIES. 



the purpose of taking such trial balances, many companies use a trial- 
balance book, a form of which is shown in Figure 139- The open book 
may show the trial balances for one year, twelve columns being provided 
for the twelve months. By having some of the leaves cut short, along 
the heavy line just before the January column, the work for several years 



Jo_ I9(h£~ 



Statement of Account ^S^ending. 

i d ilJLiojy^ U\. mXA^rff-ks^ >Hf VWW, returned. 



In account with the. 




Verified by QjliiQj. 



.Bank, 



CHECKS 


CHECKS 


DEPOSITS 


No. 


Day 


Amount 


No. 


Day 


Amount 


Day 


Amount 


1 


/ 




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31 


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Please examine balances and vouchers and report at once if any error is found. 

Fig. 140. — Statement of Account. 



FORMS FOR BANKING DEPARTMENT. 



207 



may be shown without rewriting the names; but in such case a consider- 
able space should be left after the lists under each letter of the alphabet, 
for the insertion of the names of new accounts. Overdrafts are entered 
in red ink in this form of balance book: but some forms provide two col- 
umns, one for credit balances and one for debit balances. In many insti- 
tutions, the introduction of the adding machine has done away with the 
trial-balance book, the trial balances being taken off on the adding- 
machine, which is of course a much quicker and easier way. These add- 
ing-machine lists are preserved by pasting them in scrap-books, or by 
filing them in envelopes. 

An important part of the duties of the individual bookkeeper or of 
his assistant lies in the careful preservation of deposit tickets and of 

*" rm8> STATEMENT OP ACCOUNT 



Dr. 



)0^o 



Joplin.Mo., ......L&£j£*3A ./ -.190^1 

_ bto«t in The Conqueror Trust Company, < 



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I 3 



Fig. 141. — Statement of Account. 

checks. The latter are cancelled at the close of the day's business, and 
filed away alphabetically by the names of the drawers until the pass- 
books are written up and the checks returned to the customers. The de- 
posit tickets, which are kept permanently by the company, are filed either 
by dates, all tickets for the day's work being filed together in alphabetical 
order, or alphabetically by the names of the depositors; some companies 
preferring the one method, and some the other. 

The pass-books for all active accounts should be balanced, and the 
checks returned to the depositors as vouchers, once a month. The 
methods of balancing or "writing up" the pass-books have been shown 
in Figures 110 and 111. In practice it is found to be a difficult matter 
to get all customers to bring in their pass-books for balancing each 



208 



TRUST COMPANIES. 



month; and there is always a considerable number of depositors who fre- 
quently fail to bring their pass-books when making deposits. These 
facts, together with other considerations, have led many companies to 
adopt the practice of sending monthly statements of accounts to all de- 
positors, the pass-books being used merely as the depositor's record of 
deposits made. Figures 140, 141 and 142 show different forms of state- 
ments of account, those in Figures 141 and 142 being practically copies 
of the ledger accounts in the old-style debit and credit ledger and the 
balance ledger respectively. Some companies have the statements kept 
up regularly as duplicate ledgers. The advantages of such a practice 



STATEMENT OF ACCOUNT 



(jli^Lu-al (Rp-i, 



No,. 



DATS 



WITHDRAWN 



DEPOSITED 



cs 6heJL&^JLJL/ 



off 

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Fig. 142. — Statement of Account. 



are twofold: it furnishes a check upon the correctness of the work on the 
regular ledgers, and it keeps the statements always up to date, so that 
the customer may be furnished with a statement of his account on de- 
mand. The plan also distributes the work cf preparing statements 
throughout the month, instead of requiring it all to be done at the close 
of the month, as is the case where the pass-books are called in for bal- 
ancing. If the duplicate ledgers are kept by a separate set of book- 
keepers, a check is obtained against possible dishonest practices on the 
part of any one bookkeeper. Figure 143 shows another form of state- 
ment of account, which is printed on the face of an envelope, in which 
the vouchers are enclosed when the statement is handed to the depositor. 



FORMS FOR BANKING DEPARTMENT. 



209 



£ 




^Vvm^C 



VOUCHERS RETURNED. 



THE STATE BANKING & TRUST CO. 



If no report U made within 10 days, account win 


be considered correct. 


No. 


CHECKS 


CHECKS 


, DATE, 


OEPOSiTS 


1 




sTO 










C hUlM 


I 








2 




21 


fro 








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Fig. 143. — Statement of Account. 



It is not the usual practice to take the depositor's receipt for the 
vouchers returned to him; but this is done by some companies, and there 
are those who maintain that a receipt in such a case is quite as important 
as a receipt for any valuable papers. One form of such a receipt reads 
as follows: "Received from the Blank Trust Company of Chicago, Illi- 
nois, my pass-book, balanced, with paid checks. Unless advised to 



210 TRUST COMPANIES 

the contrary within five days, the balance may be considered correct, and 
the paid checks in all respects genuine." 

A troublesome thing for the individual bookkeeper to handle is the 
stopping of payment on customers' checks. Sometimes a rack is provided, 
in which are placed cards like that shown in Figure 144, containing de- 
scriptions of the checks of which payment is oidered stopped. Another 



PAYMENT STOPPED, hat e fjAJloJp 



MAKER 




DATE 7<> ^ v? No. g *-n AMOUNT, 



ORDER OF 






REASON 



o^Wa 



PRESENTED AND MARKED ORDERED PAID_ 

WROTE MAKER 



Fig. 144. — Stop-Payment Memorandum. 

plan is to paste on the ledger a slip like that shown in Figure 145. A 
third plan, and probably the safest one, is to make duplicates, from the 
descriptions furnished, of all checks of which payment has been ordered 
stopped. When the incoming checks are arranged in order for entry in 
the books each day, these duplicates are inserted in their proper order 
with the other checks, so that the memorandum is found where the hook- 



ey ^t^L^t^t^i^i^i^i^i^i ^ig^^ 

STOP PAYMENT on CHECK Hoj32j£ 

Dated ^^^<$I 19 O.L.. For $±Z$~— 

Brawn by^fP^Ct^ (&.£&. 



Favor of {^jU^^^v^ 

Remarks 



Fig. 145. — Stop-Payment Memorandum. 



FORMS FOR BANKING DEPARTMENT. 



211 



keeper cannot easily overlook it. These duplicates are kept and used 
daily for a week or two, after which time the date of the check will of 
itself put the bookkeeper on his guard against paying it without investi- 
gation. 

The General Books. 

If a general system of proofs, such as that described in connec- 
tion with figures 124 to 127, is in use, the first form needed by the gen- 



GENERAL BOOK-KEEPER PROOF 




DATE 








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Fig. 146. — General Bookkeeper's Proof. 



eral bookkeeper for the record of the day's work is his proof, a form 
of which is shown in Figure 146. On this proof he lists the items 
received from or sent to the other workers, in the same manner as 
has already been described for the tellers' proofs, figures 124 to 127. 
When all of the items (except the bookkeepers' totals) have been 
entered, the totals are listed in the places indicated under the head- 
ing "Summary" at the right of the bottom of the proof: and if the work 
has been done correctly, the total of the debit items will agree with the 



212 



TRUST COMPANIES. 



total of the credit items. The bookkeeper then has a proof of the cor- 
rectness of his work for all items except the totals to be furnished 
him by the individual bookkeepers, draft tellers, etc. When such totals 
are received they are entered in their designated places under the head- 
ing "Summary" at the left of the bottom of the proof, where are also 
entered the totals of the general book items listed on the proof. Mean- 
time the general journal is written up, and the correctness of the work 
there is indicated if the total debits and total credits agree with such 
totals as shown by the final "Summary" on the proof. The difference 
between these totals shows the amount of "general cash" at the close of 
the day's business; and with this figure the amount of "general cash" 
shown by the paying teller's summary of general cash, figure 126, must 
agree. 




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Fig. 147. — General Journal, Left Page. 



For a general journal many companies still use the old-style two- 
column journal with debit and credit pages. Figure 147 shows the left- 
hand or debit page of such a journal. The right-hand page is ruled in 
the same way, having the heading "Cr." instead of "Dr." Much more 
convenient than the old form is the improved general journal shown in 
Figure 148, in which debits and credits are entered on one page, and the 
names of the accounts, being in the center, need not be repeated for debit 
and credit entries. The width of the page is about IS 1 /*? inches. Figure 
149 shows another form of one-page general journal, having a different 
arrangement of the amount and explanatory columns. 

For a general ledger, the old style ruling, without balance columns, 
is still in use by some companies; but ledgers having balance columns 



FORMS FOR BANKING DEPARTMENT. 



213 



are decidedly preferable, and are in general use. Figures 150 and 151 
show two forms of such a ledger — that shown in figure 151 being the 
better of the two, because it more distinctly separates debit and credit 
items. These ledgers may be either permanently bound or in loose leaf 
form. 



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Fig. 148. — General Journal. 



Explanatory Matter. 



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GENERAL JOURNAL 



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Fig. 149. — General Journal. 



^J^wJS. in cX-u^jsJL /&s^n^&<jJA. 



Date 


Explanation 


Debits 


Credits 


Dr. Balances 


Cr. Balances 


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Fig. 150. — General Ledger. 



214 



TRUST COMPANIES. 



The general bookkeeper enters the balances from the general ledger 
in the daily statement (or balance) book, which serves the double pur- 
pose of a daily trial-balance of the general accounts and a condensed 
statement, which enables the officers to see the condition of the company 
at a glance. 



GENERAL LEDGER- 



SHEET NO. 



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Description 


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Date 


CM. BAU4NOX 




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Description 




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Fig. 151. — General Ledger. 

In its simplest form this book is merely a list of the balances of the 
general ledger accounts, so arranged that separate footings may be taken 
of the debit and credit balances, to show their agreement. Figure 152 
shows an old form of daily statement, in which the accounts are listed 
in the order in which they are found in the bound general ledger. As 



FOLIO 




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Fig. 152. — Daily Statement, Old Style. 



FORMS FOR BANKING DEPARTMENT. 



215 



Daily Balances. 



RESOURCES 



3^,3, tq<xsr 



$SL&. /f, /^OvT 



cfcaA,^" i<foS~ 



$JL 6, /<?o£~ 



Demand Loans 



< Time Loans 



in 



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sri& 



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11 



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33. 



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121 



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Real Estate Loans 



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TOTAL LOANS 



£dJ2 



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14. 



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$&j£<gS_ 



Sundry Investments - 



TOTAL INVEST'TS 



Jo*S'&S-H-6>S 



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fr^H 



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Reserve (cash) 



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Reserve (outside banks) 



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TOTAL RESERVE 



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I,nt. Com'l Deposits 



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Int. Savings Deposits 



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TOTAL EXPENSE 



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Real Estate 



FURNITURE AND FIXTURES 



so 



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to 



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Bank Earnings 



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13 



Investment Earnings 



o_i4 



123 



oSLS 



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Safe Deposit Earnings 



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Trust Earnings 



n>^G 



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1 TLtT 



3d 



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llSUNTlRY EARNINGS 



TOTAL EARNINGS 



<S"i££f6 



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21 



< n . ^o 



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Certificates of Deposit 



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to 



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lo 



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til 



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Savings Deposits 



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TOTAL DEPOSITS 



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Fig. 153. — Classified Daily Statement. 



will be seen, two columns are required for each day's statement; and the 
book is usually arranged to show a week's work on each double page. 
By having some of the pages "cut short" along the line just after the 
names of the accounts, the frequent rewriting of the names may be 



216 



TRUST COMPANIES. 



The Blank Trust Company. 



New Commercial Accounts Opened -3_ 

Commercial Accounts Closed L_ 

Total No. of Open Com'l AccUs 93 & 



New Savings Accounts Opened ^^ 

Savings Accounts Closed **-■ 

Total No. of Open Savings AccUs -3 a.-S'/f 



ASSETS. 



LIABILITIES. 



Real Estate Loans 



Ife 



l(oO 



Capital Stock 



/chd 



O-0c 



Collateral Loans 



1*1 w 



I 3 



Savings Deposits 



?>X(c 



LlL. 



m 



Bills "Discounted 



to 



frirhf 



t£ 



Special Depos its 



Cash 



2& 



i>?> qt:{ 



Commercial Deposits 



4- 



£3% 



OOP 

2 



^. 



Bankers National Bank 



3 | 



U3. 



ik 



Certfs. of Deposit, Special 



Seaboard National Bank 



2.0 



lira 



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Certfs. of Deposit, 4% 



Jo 



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Bank Building 



2u> 



Certfs. of Deposit, 3% 



■S '3/3 



Furniture and Fixtures 



I o oo-o 



Deposit Loan Payments 



Z2M£j2 



%eal Estate 



2JLQ-Q-V 



Current Earnings 



itnLSk 



Stocks and 'Bonds 



■IQ^ooo 



Undivided Profits 



An. 



IQZ 



u 



Insurance, Taxes, Etc. 



Interest "Due and Unpaid 



Current Expenses 



3221 



n 



Int. Paid on Certif. of Deposit 



IJA 



6<7 



Int. Paid on Commercial Accounts 



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3 66S7f 



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± o 



Fig. 154. — Daily Statemext. 

avoided. In the larger companies, however, the names are usually 
printed in the book, and the short leaves are then unnecessary. Figure 
153 shows an improved form of daily statement, in which the different 
accounts are grouped according to classes, and the totals of the classes 
are shown in red ink. The resources and liabilities are grouped sepa- 
rately, and only one column is used for each day's work. The balances 
for two weeks may be shown on each double page. Other forms of 
statement books provide an extra column for the group totals shown in 
Figure 153. 

Some companies have each day's statement written on a separate 
sheet of paper, the sheets being filed in a loose-leaf holder. Figure 154 
shows a form of such a statement, which includes also a memorandum of 
accounts opened and closed. 



FORMS FOR BANKING DEPARTMENT. 



21V 



The arrangement of the details of the statement of course varies 
with different companies, according to the accounts carried and the 
character of the business. For example, some prefer to show in the 
general statement the balances in each of the depository banks, while 
others show, as in Figure 153, simply the totals, and give the details in 
a separate statement devoted to the reserve. 



General Accounts . 



RESOURCES 



SjLCxrr^A 9U±^r^J (&c^rJi 



-23 



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Fig. 155. — Boston Ledger for General Accounts. 



These three books — the journal, the ledger and the statement book — 
are the ones included in what is sometimes called the "three-book system" 
of keeping general accounts. Instead of this, some companies use the 
"one-book system" — the one book being a modification of the Boston 
Ledger. A form of such a ledger is shown in Figure 155. As a study 
of the figure will show, the accounts are kept in this book in practically 



15 



218 



TRUST COMPANIES. 



the same way that individual accounts are kept in the regular Boston 
Ledger. The book serves for both journal and ledger, the entries being 
made directly from the original debit and credit tickets. Except for the 
convenience of the officers, a separate daily balance book is not needed, 
as the balances in this ledger provide a daily statement. In this form, 
the resources are grouped at the top, and the liabilities at the bottom of 
the page, so that only one balance column is needed. Some prefer, how- 
ever, to have two balance columns side by side for debit and credit 
balances respectively. This may be done by simply adding another 
balance column in the form shown in Figure 155 — the balance of the 
ruling being the same. Figure 156 shows the ruling of another form 
having wider description columns; and Figure 157 shows a form with 
wide description columns and two balance columns. In both of these 
figures the ruling for one day's work only is shown; that for the other 
days being the same. 



190 



DEBIT 



AMOUNT 



CREDIT 



BALANCE 



Fig. 156. 



































































Debit Items 


Debits 


Credit items 


Credits 


Resources 


Liabilities 


1 
































































Fig. 157. 



An evident objection to this method of keeping the general accounts 
is that the book does not provide much space for the description of items ; 
which, for some accounts, is quite necessary. To overcome this obstacle, 
some bookkeepers use an auxiliary book, in which are carried in detail 
those accounts whose items are apt to need much description, only the 
totals for such accounts being entered in the regular ledger each day. It 
is of course possible to do away entirely with the description columns and 
use the book strictly as a ledger, with a regular journal for details. 

Entries on the general books are usually made from debit and credit 
slips which are furnished to the general bookkeeper by the various tel- 
lers, bookkeepers and officers. Figures 158 and 159 show forms of debit 
and credit slips respectively. Figure 160 shows a combined debit and 
credit slip, which is convenient when both debit and credit go to the same 
bookkeeper. As a matter of convenience in filing, it is well to have all 
slips of this character of the same size and shape; although some prefer 
to have the debit slips of the size and shape of the company's check, and 
the credit slips of the size and shape of the deposit ticket. After using.. 



FOKMS FOR BANKING DEPARTMENT. 



219 



the slips should be carefully filed for future reference, as they are the 
general bookkeeper's vouchers for entries in his books. In all cases the 
slips should be signed or initialed by the person responsible for the trans- 
actions represented. Theoretically they should be signed or "O. K.'d" 
by an officer; but this is practically impossible in a large institution. 
Charges to the expense account, however, should invariably be approved 
by an officer. Many companies have a special form of debit slip or 
voucher for petty expense items, and Figure 161 shows a form of such a 
voucher. Petty expense items are often carried by the paying teller in 
his cash until the close of the week or month, when their total is entered 



DEBIT 



.'(^:^y}^^^rs^..^s^: 



&~<2K^ysXiy 



iShaa^^ ...t.3.1.(oA .,.$ 

...0^.,..3.sJN.(t!^^KS^. , JLTJeJL ....„ 

< 5^fe-^~. ^a^^.?<L^YNZ. ...snAk 



>S0o o 

,..:l£pO 



J 



3.Q.Q 



Date 



U2JL 



i> i0^....(&£^. 



.. 190 ..: 

Fig. 158.— Debit Slip. 



CPEDIT ^cnxXXL < l/lddbur»u*JI (Bq^ifc 



A/h -Ulc <Uk 


% 


s 


/*7 


\S 



















































Date, 



Hi 



-190 



<^ 



Xj 



\^>^xpt ^kJuia^r 



Fig. 159. — Credit Slip. 



on the general books. Instead of debit and credit slips, some companies 
use a bound book known as the charge and credit book; but while this 
provides a permanent record of such items, it is rather too cumbersome 
for a company doing a large business; and it is doubtful whether it adds 
anything in the way of safety. 

In addition to the regular books of account* the general bookkeeper 
prepares or gathers from the heads of the different departments, daily 
reports, which, with the general statement, are placed each morning upon 
the desk of the executive officer. In a large company, these include re- 
ports from all the various departments — banking, savings, trust, safe-de- 
posit, bond, real estate, etc. The amount of detail given in these reports 



220 



TRUST COMPANIES. 



varies in different companies; some of the items covered being lists of 
accounts opened and accounts closed, with the sources of the former and 
the reasons for the latter; loans made and paid; overdrafts; details of 
the reserve ; over and short cash ; large deposits or withdrawals ; new 
trusts received; trusts closed; important transactions in the trust depart- 
ment; investments made and investments sold; purchases and sales in the 
bond department; safes rented and safes surrendered, etc. These reports 
often contain a comparison with the figures for the same items on the cor- 
responding date of the previous year. Figure 162 shows a portion of a 
daily report for the banking department, showing a list of new accounts. 



cqFXfciT OixL^tP @Lkf (&?^jc /7l 



(Jis_srdt-0LAJL -ttTT Oust; CUCLC? Jf /QJj£jUS^A*( dUAZsr\yhuL Jj%£&uT 



■SO 



£_Z^ 



DFBIT vvqv</y^a>ka^-vCX4> 



^O^k-Srrn^^^AliU. lOsd^-U^. kgxMjQ. lQ l 




•S'OS'OO 



<lA*T 



Cryy. 



j^Af\^>\i£a£h Q&yr* <^r uy^ 



37 g ; 



Date. 



%cJL£. 



.190 



& 



C/0. <A . ^nA^JL/t$C Gr^u^ 



Fig. 160. — Debit and Credit Slip. 



EXPENSE DEBIT. 



DISTRIBUTION 



(j QjgkTi^lv ^c^JLL^i. 



FOR 



fly ^S X X Q^v^fL ©V <?£ ~^ 



"*t 



<$&a 



DATE 



flkjoOL 



O. K. BY. 



S*~Jlr<R"o, ^*- 



reoeived of The Star Trust corcpany to* the fvim« speoifieo above. 



# 



sST> 



SIGN 



here. CR xsifLuni & c 



crr^u 



Fig. 161. — Petty Expense Voucher. 



Monthly, semi-annual and annual reports are also compiled, these 
usually including comparative statements to show the growth of the com- 
pany month by month or year by year. The general purpose of such re- 
ports is to enable the executive officers — who naturally have little time for 
details — to quickly inform themselves of the condition and the trend of 
the business. 

The Loan Department. 

There is considerable difference among trust companies, as among 
banks, in the manner of handling the details connected with the mak- 



FORMS FOR BANKING DEPARTMENT. 



221 



ing of loans. The methods vary with the size of the company, the 
character of the business and the preferences of the officers. In some 
companies all the details, including the keeping of the records, are* 
attended to by the loan clerk and his assistants; while in others much 
of the detail, as to records especially, is handed over to other workers. 
Often the loan clerk keeps no journal, all the loan items being detailed 
in the general journal from debit and credit slips which the loan clerk 
hands to the general bookkeeper. In some companies the loan clerk 
keeps a cash drawer and issues official checks, paying out the proceeds 
of loans directly; while in others cash payments are made by the paying 
teller, and checks are issued by the draft teller or other employee. The 
records here described are such as are used in cases where all the details 
connected with loans are attended to in the loan department. 



DAILY HEPOHT-BASKI>tn DEPARTMENT- CQXTtygE 

Last Year 



Accounts Opened. 
Accounts Closed, 



Day 

12^. 



Month. 

n 



Daj- 

-3- 



Month 
3~l 



Banks Issued, , . ^- > „ 

Banks Surrendere d CJ 
Total in Use I X8^ 




^ 



Savings Accounts, . . \ v S~<o *j~ 
Total, . 7? / 3, 



Commercial 



Savings 



Certificates 



Source 



Q\. CK^a^Lgy^ 



*?7 g^Ovs,. 



3&~Q 



UhR.S. 






iq<ok 'M^u. &*. 



I O&o 



OJL 



J(-r>Z)jt>Kt i IjLbiji 



S~Q o 



(JyCbKs^^t~ L&TTT'Lvy-^' 



a,/3 S^QL^r- 



2^3 



kl. 



r\ 



(JhSL^K-rU-LJto 



3S~ 



££^ 



S~oo 



^kju^.A-. 



Total Amount. 



Fig. 162. — Portion of Daily Report. 

The loan teller's proof, being arranged according to the same princi- 
ple as that of the proofs already described, 74 need not be reproduced 
here. 

A number of styles of loan journal are in use, probably the most 
common style being one having several columns for the different classes 
of loans handled, and one or more columns for interest items. Figure 
163 shows a form of such a journal. In this form the interest on the 
different classes of loans is shown separately. Other forms have only 
one column for interest. The columns headed "Accrued Interest" are 
for the entry of interest items accruing at the regular interest periods; 
it being the practice of some companies to charge the total interest ac- 
cruing at such periods to an account in the general ledger entitled "Ac- 
crued Interest," and to credit it at once to earnings. Payments of such 



74 See Figures 124-127, 146. 



222 



TRUST COMPANIES. 







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_n — I — i — i — i — i — 1 — 1 — i — i — 


J — I— J — 1 — 11 [II — t .ll. ■_ 



FORMS FOR BANKING DEPARTMENT. 



223 



\D'JuU£Xsyy^ Q\. ^^j-^Jt^ 



DEMAND LOAN 



mm $ifk jJh$fc 



^HTI 



INTEREST 


LOAN 


PAYMENTS 


o»Tt PAID 


PAID TO 


AMOUNT 


TflBf 


»AT»: 


AMOUNT 


»ATt 


AMOUNT 


•Al&KF 


*UL. 


1* 


^JU 


I<£~ 




xS" 




vS" 


W 


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pac 




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nnn 














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tar 


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A 


'••"' 




" 


























..... 


v Dun 


[.u. CM,«, 


!».«». 





Fig. 164. — Face of Card Ledger for Demand Loans. 



WOTC 
NO. 


DESCRIPTION OF COLLATERAL 








/ 


ZLo-O-O . QKj> A-0*a o a Xj> <rO~kii^ (%U , /^"luJ^p <o ^oX^^^aci^a toi 


3 


1 H-O 






a^^e Oi.yQKrc-L-n d^.^^tfZc, (L*#M«-Mia ' "* **r 


/ 


9<\~0 




P~> 


/o *J?.<PuJ *,...* ^L^ C^w-^,. ' .. ^afi6 e aa» 


Z. 


3o o 






















































































































































































































































Received from THE CITIZENS SAVINGS AND TRUST CO., all of the above described collateral. 










o«+t 







































Fig. 165. — Back of Card Ledger for Demand Loans. 



224 



TRUST COMPANIES. 



interest are then credited to accrued interest as received; and the balance 
against this account at any time shows the amount of past-due interest. 
This plan insures that interest shall be placed to the credit of earnings 
during the period in which it is earned, and it also serves as a safeguard 
against overlooking any past-due items of interest. The totals of the 
different columns in this journal are handed to the general bookkeeper 
on debit and credit slips at the close of each day's business. 

Substitution of Collateral, 

Pittsburg, Va. f JhjLu 7 190 ^ 
The unc.eraigned acknov/ledges that he has this day r4oeived from The 
Blank Trust Company the following securities held as collateral to 
loans-- 



And that he has deposited in lieu therof , subject to the same condi- 
tions as the collateral originally pledged, 




Fig. 166. — Form for Substitution of Collateral. 



TO SLLu c hA. LOa^L 








ADDRESS 


5-TI4-3 


\^>JUr\^r^^K ■&•■ 




MEMO. RATE (q \Q 






for •*-**«*•• 


DESCRIPTION 


RATE 


D.TE 


TIME 


DUE 


D.TE 


OCT 


CREDIT 


B.l.NCC 




4 
grooo- 


Qlor<£M*LkJLn,(R<j ld<k^k 


&T 


^ 


s. 


^ 


3 


s 


06 


Jfc 


2Sp 










_i£ 


2,TO 






ia-rro 


%k. %^ l i^n i nt+* HOr^hs^f- 


80 


%t 


bo 

A, 


lU 


(o 


3 


Ola 


a. 


tfoo 




Jt 


a-so 




2. 


JfOO 






























































































































































































































































































































































































































































































,A 


,, HE 


K. o> 


.MX 


mil. «. 




76'% 


jMjy 


4. 





Fig. 167. — Face of Card Ledger for Time Loans. 



FORMS FOR BANKING DEPARTMENT. 



2*25 



Cards are quite generally used for loan ledgers. Figure 164 shows 
the face, and Figure 165 the back, of such a card ledger for demand 
loans. As a study of the figures will show, the loan account and the 
interest record are kept on the face of the card,, the back being devoted 



-INTEREST RECORD 





TO 


AMOUNT 


PAID 




TO 


AMOUNT 


PA ID 




u 


3 


06 




63 


l& 


3 


ST 


oQ 


- 






















k 


a 


oL 


1. 


36 




6 


3 


O(o 












































































































































































































. _. J 


_... 




























































i 




















































































































































































































































































- 


u 


5 


Q(e> 


COLLATERAL SURRENDERED 

the undersigned ac k now le dge's receipt on the dates mentioned, 
of the Securities described below. 




' Tto-%>*fct£ <Lo .Oj /-^<rk. 


etl^Ta.Uastrt 
































































































































































RECEIVED FROM THE CLEVELAND TRUST COMPANY, ALL SECURITIES AND OTHER PAPERS DUE IN 
CONNECTION WITH THE WITHIN DESCRIBED LOAN. 

SIGN BELOW 
CLEVELAND, O. 



Fig. 168. — Back of Card Ledger for Time Loans. 



226 



TRUST COMPANIES. 



to a description of the collateral, and to the receipt which is taken when 
collateral is delivered. The receipt on the card is more convenient than 
a separate receipt, as it insures that everything in the way of record of 
closed-out loans shall be filed together. With some loans, however, and 
particularly with those of brokers, the changes of collateral are so many 
that there is not room on the loan card for the various receipts. For 
such cases it is convenient to have a separate form for the substitution 
of collateral, such as is shown in Figure 166. The separate receipt is 
useful also in the numerous cases where the owner of the collateral does 
not come for it in person, but sends a messenger. 









&L> ifhuu^- HokK Lt^rdraX. * 


\MvJU~».(&<n^(Rd? 1- 


n. 
















*^P 




*™«» 


„,*«,„„ 


LOANS M«K 


WITHDRAWALS 


BALANCE 




"?<?- 


s- 


■"* 


"""' 


'»■"""» 




SHARES 


AMOUNT 


SHARC1 


ICAMS 




Qfl 


..T 


314-1 


Qg^ja. o-t^ /JC' 


I7LO 


a-s - 


3 


r. .-■ ,;. 
















2<£" 


3J 










10 


3)6 1+ 


(XAXtCu*-or \fOrs-ur*\, 


IZO 


..TO 


C 


o-o-o 
















7-S- 


<? 






%Uf 


IS 


3XI& 


(Atrv ^^CRtrv 


loo 


<&0 


■s 


iVM 
















IAS 








-f 






3 1 (.1+ 


(Xs^kh^r- \&tt-L*s^J 












u^ 


hS 


SO 


(>o-oe 




is 


<< 























































































Fig. 169. — Collateral Line Ledger. 

Figure 167 shows the face, and Figure 168 the back, of a card ledger 
for time loans. In this form the loan account and the description of 
collateral are given on the face of the card, the interest record and the 
receipt being on the back. These ledger forms may easily be adapted 
to permanently-bound or loose-leaf books if desired. 

It is important to know at all times the amount of loans carried on 
each kind of collateral, to avoid loaning too heavily on any securities, 




LINE LEDGER 



9W- ^ort QuzdhJL ^LJU^, (Rh2*L S&gL Q> 



BONDS $ 



COMMON 8TCCK * 



LOftHI HIDE 



'LOAN! PAID 



BORROWER 



^*LQ±. 



rS oz-v^Ad- 'O^yoC /CfC 



IXO 



2JL 



ooo 



2*- 



°OQ 



JMaM±&*C-&=L 



W>nJ 



l<\Q 



aha 



jls: 



OOP 



£-<£.. 



/W <W <&K 



loo 



& QQ Q, 



JaI£. 



J4 



0O£ 



t§: 



(Ixtj^A^r O&y-o-ucnr^J 



OQO 



l£L 



£_ooa 



Fig. 170. — Collateral Line Ledger. 



FORMS FOR BANKING DEPARTMENT. 



227 



and for reference in case loans must be called because of decline of 
collateral. For this purpose a collateral line ledger is used, of which a 
loose-leaf form is shown in Figure 169, and a card form in Figure 170. 
The figures are self-explanatory. Figure 171 shows a card used for 
a collateral line ledger on a different plan. An index card is provided 
for each kind of collateral, and behind each index card are filed the 
cards like that shown in Figure 171, a separate card being used for each 
loan. When a loan is paid, or other collateral substituted, the old card 
is removed from the file and destroyed. To get the total of any given 
collateral held, or the amount of loans on same, it is necessary to add 
the amounts on the several cards that may be filed after the index card. 



NAME 




^(rl-X-^V OnAAA-/U\ 








/ 1 ' 


OAXC j, 1 1 PAR OR SHARES 


- 




AMOUNT 


1 


q 


oL 


»s-o 


120 


0&3J41 


L 


oo o 


1 




























































• 


















1 
















ooj 


^If^OH 


■^jCrxxil 


.*s#^.<R. 


/du&ycj 


t 










-2-A 






o max 


tOUIHKM 


i 

F co. | 



Fig. 171. — Collateral Line Ledger Card. 



Figure 172 shows a form of collateral note used in New York city. 
A shorter form, used in a large city in the Central States, reads as fol- 
lows: 



CINCINNATI, O. 



,190. 



On demand after date 

THE BLANK TRUST COMPANY 



for value received, with interest at 
num, payable quarterly on the 15th 
and December of each year, unpal 
Interest at the same rate as the prl 
Company as collateral security for 

ty or liabilities of to said Com 

may be hereafter contracted, the fo 



promise to pay to the order of 

at Its office 

DOLLARS, 

the rate of per cent, per an- 

days of March, June, September 
d installments of Interest to draw 
ncipal, having deposited with said 
payment of this or any other liabill- 
pany, due or to become due, or that 
Mowing property, viz.: 



The market value of which is now $ ; with the right to call for 

additional security should the same decline; and on failure to respond, 
this obligation shall be deemed to be due and payable on demand, with 
full power and authority to sell and assign and deliver the whole of 
said property, or any part thereof, or any substitutes therefor, or any 
additions thereto, at public or private sale, at the option of said Com- 
pany, or its assigns, and with the right to be purchasers themselves 
at public sale, on the non-performance of this promise or the non- 
payment of any of the liabilities above mentioned, or at any time or 
times thereafter, without advertisement or notice, and after deducting 
all legal and other costs and expenses for collection, sale and delivery, 
to apply the residue of the proceeds of such sale or sales so to be 
made, to pay anj', either or all of said liabilities, as said Company, or 
its president or treasurer shall deem proper, returning the overplus to 
the undersigned. 



No. 



Address. 



228 



TRUST COMPANIES. 



This form, providing as it does for quarterly payments of interest 
on a demand note, illustrates the custom in some localities of carrying 
demand loans for several months or even years, so long as the collateral 
does not decline in value to a point which makes the margin too small. 
)t is evident that this is quite different from the "call" loan as usually 
carried in New York city. 




$3*KK>j£_ 



New York 



,^ikkAsL. at. 



nV$- 




^...after date, for value received, the undersigned promises to 



PANY. or order, at the office of said Company, 26 Nassau Street, City of New 



pay the COLUM6 

York, ^QNAJZJL, 

with interest at the rate 

as collateral security for the^payment of this, and for all other present and future demands of the holder hereof against the 

undersigned, dueoj-not due 

„as_*i si- 



>JL .^rrr>~^->~_~-rr--»_« c ^^^ Dollars ($30>£b&Z=. -..-) 

of. ..~4LX.</V.v r zrr...per centum ( *fc %) per annum, having deposited vvith said Trust Company 








and hereby empower the holder hereof, on non-performance of any obligations herein contained to sell, without notice 
and without demand of payment, the whole or any part of said securities and substitutes therefor and additions thereto, at any 
brokers' board or at public or private sale, within or without the City of New York, at the option of the holder hereof, and after 
deducting all legal charges, expenses of said sale and collection of this note, to apply the proceeds to the payment of the principal 
and interest of this note, and other demands against the undersigned aforesaid, accounting to the undersigned for the surplus, 
if any. 'n case of deficiency after sale and application of proceeds, the undersigned agree to pay the amount thereof, with legal 
interest 

In case of depreciation in the market value of the property held as collateral to this loan, or in case any of the collateral 
securing this loan shall be unsatisfactory in amount or otherwise to the holder, the undersigned will forthwith make such payment 
of principal and interest, or deposit such additional securities as collateral hereto, as may be required and approved by the holder 
hereof. In case such payment shall not be made, or securities deposited as aforesaid, this note shall, at the option of the holder, 
become immediately due and payable, and the collateral deposited, as aforesaid, may be forthwith sold and the proceeds thereof 
applied as hereinbefore provided, the undersigned contracting and agreeing forthwith to pay the holder any deficiency, with legal 
interest thereon. On sale of any of said collateral the holder may purchase and hold the same, free from any claim of the under- 
signed, applying the amount of the purchase price in the liquidating or reducing the indebtedness. . The collateral herein 
mentioned, and any securities which shall be either added to or substituted therefor and the proceeds thereof, shall also be held 
and treated as collateral security for any and all other debts or claims (absolute or contingent, due or to grow due), held against 
the undersigned by said Trust Company at any time, and shall be subject to sale upon non-performance of any obligation thereby 
imposed and to all the conditions and agreements herein contained. 

Any delay on the part of the holder hereof in exercising any rights hereunder shall not operate as a waiver of said rights. 

If the undersigned shall become insolvent, make a general assignment for the benefit of creditors or file a voluntary petition 
in bankruptcy, or if a petition in bankruptcy be filtfd against the undersigned, then this note shall be forthwith due and payable, 
and in any such event all property of the undersigned in the possession or under the control of the Trust Company shall be 
collateral security hereunder. 



IddJL 



rwc.VV ^ U^pt~ 



Fig. 172. — Collateral Note. 

A power of attorney for the transfer of stock is printed on the back 
of each stock certificate; a customary form of such a power being as 
follows : 

For value received hereby sell, assign and transfer unto 

shares of the capital stock represented by the within certificate, 

and do hereby irrevocably constitute and appoint at- 
torney to transfer the said stock on the books of the within-named 
company, with full power of substitution in the premises. 

Dated 190 

In presence of 



For various reasons, however, borrowers often prefer to sign a 
separate power of attorney, and a form for same is shown in Figure 
173. 



FORMS FOR BANKING DEPARTMENT. 229 

In cases where loans are made to corporations, it is necessary to have 
evidence of the authority of the officers of the corporation to hypothecate 

TRANSFER OF STOCK. 



"ftnow all fl&en be tbeseOresents, That 

for value received, b=i_ have bargained, euld, assigned and transferred, and by these presents do bararalr 

sell, essien and transfer unto, 
I •) O ■ SHARE.S of 



S+.(P**lL<£y , 



2 




Herewith, and ^L — _ , do hereby constitute and appoint 

true and lawful attorney, Irrevocable for flA-JC and ln_ 




^kl^^name and stead. But +" 'VUCX/, 
?lc.^»n*d for that purpose to make and esc^eut 



ae, to sell, nssiffn, transfer and set over, all or any part of said stock,) 

i substitute with like full power, herebv 
substitutes shall lawfully do by virtue 



Signed and acknowledged in presence of "\ f \ V if * ftS ^S~* 



Fig. 173. — Power of Attorney for Transfer of Stock. 

its securities. For this purpose a copy of the resolution of the board 
of directors of the corporation authorizing such hypothecation is re- 
quired, a form for which is as follows: 

COPY OF RESOLUTION. 

At a regular meeting- of the Board of Directors of the 

Company of held on the 

day of A. D,, 190 the following resolutions were un- 
animously adopted: 

RESOLVED, that the president, vice-president, secretary or treas- 
urer of this company are, and each of them is hereby authorized and 
empowered to borrow on behalf of this company from the Blank Trust 
Company from time to time, such sums of money as such officers or 
either of them may deem expedient, not exceeding in the aggregate at 
any one time the sum of dollars, on such terms and condi- 
tions as such officer so acting hereunder may approve, and to pledge as 
security for the re-payment of each of such loans such securities or as- 
sets of this company as may be required, and agreed upon between 
such officers and the Blank Trust Company, and to give this company's 
obligation or obligations in evidence thereof, and from time to time 
when any obligation evidencing any of such loans matures, to renew 
the loan in whole or in part until the same is paid in full; and that 
each of such officers is also authoriz d to borrow money from the Blank 
Trust Company on behalf of this company, from time to time by re- 
discounting with said Blank Trust Company any of the bills receivable 
held by this company, not exceeding in the aggregate at any one time 
the sum of dollars, on such terms as such officer may ap- 
prove; and the Blank Trust Company may, at any time, apply any 
money or property in its hands belonging to this company to the pay- 
ment of any indebtedness of this company to it, whether due or not. 

RESOLVED FURTHER, that a certified copy of these resolutions be 
sent to said the Blank Trust Company, and that they shall remain in 
full force until written notice of their repeal shall have been given to 
the Blank Trust Company, and until all indebtedness which may have 
been incurred as aforesaid shall have been fully paid and satisfied. 

THIS IS TO CERTIFY, that the foregoing is a correct copy of the 

record of a meeting of the Board of Directors of the Company, 

of held in said city on the day of A. D., 190 



(Affix seal of company here.) 



The officer certifying the copy of resolutions should be other than 
the officer on whom the resolution confers power to borrow the money. 

It sometimes happens that a person wishes to get a loan on securi- 
ties which are in his possession, and are properly endorsed for transfer, 



230 



TRUST COMPANIES. 



but are not his personal property. In such cases, it is best to have from 
the owner of the securities a certificate showing that the other person has 
authority to pledge them as collateral. A form used for this purpose is 
as follows: 

AUTHORITY TO HYPOTHECATE SECURITIES. 

Buffalo, N. Y., Aug. 5, 1906. 
To the Blank Trust Company. 

THIS IS TO CERTIFY, That John Jones is hereby authorized to 
hypothecate for his own account or otherwise, 100 shares of The Lake 
Shore and Michigan Southern Ry. Co. stock standing in my name, as 
security for any loan or loans made by the Blank Trust Company to 
him or for any other indebtedness of his to said Trust Company, and to 
receive said security upon payment of such loan or indebtedness. This 
authority is good until revoked by me in writing. 

MARY R. JONES. 
Witness: Wm. Smith. 

For the safe-keeping of the notes and collateral, loan envelopes are 
provided, made of manila paper or of strong paper re-enforced with 
cloth, and having printed on the face memoranda regarding the con- 
tents. Figure 174 shows the face of such an envelope. These envelopes 



LdaMiur^A.^hL^mj 



DEMAND COLLATERAL LOAN No. 35% I 
^Jp-I \o(o AMOUNT t 3(^^>- 



\M (?.*0.&jL>ju, Kiho. 










WOl.if &.1&.&4L 


I4ST), 










,<>u <pM(^ <p.e.&. 


S.3oo. 














































































































1 




















1 



Fig. 174. — Face of Collateral Loan Envelope. 



are filed alphabetically in the drawers of a cabinet which is kept in the 
vault. A convenient arrangement is to have this cabinet made of metal 
and mounted on trucks, so that it may be placed in the loan cage during 
business hours. On each envelope, as the figure shows, are recorded the 
name of the borrower, the date, number and amount of the loan, and a 
list of the collateral; the plan involving the use of a separate envelope 
for each loan, even when there are several loans to one person. Some 
companies, however, keep the collateral of all the loans of each customer 
in one package, using expansible wallets which will contain a considera- 
ble number of papers. In cases where the collateral consists of a number 
of bonds too large to be placed in an envelope or wallet, the bonds are 
kept in a specially prepared place in the vault, and a memorandum of 
same is placed in the loan envelope. In some companies all collateral 
for loans is kept always in the vault under joint control of two officers, 
or of an officer and the loan clerk, or of one of these and the auditor or 
one of his force. 



FORMS FOR BANKING DEPARTMENT. 



2S1 



Some companies do not file the notes with the collateral, but keep 
all notes together in a wallet, for greater convenience in endorsing interest 
and payments. 

Instead of, or in addition to, keeping a record of loans and collateral 
on the same cards or sheets, as indicated on the records above described, 
some companies keep a record of the collateral in a separate book known 
as the collateral register, a form of which is shown in Figure 175. Of 
this record one page (or more if needed) is used for each borrower. 
Another form of this record is shown in Figure 176. A third form 
contains space for the record of collateral of loans to different customers 
in consecutive order as the loans are made. Space is left after the list 

0^ 



DATl 

J£ofe_ 



COLL4TEB»i« 



%L 



Axu-U 



I'tor&ydntd^ <fi^./l+S^*l31c 



%A^ 



LU-£. 



^xVurvr-^fr fa+ifziiS-nio 



■•■■■ 



lS*£QU>l V .S'}<PfJ C,Ai*UH IhI, 



2L 



Fig. 175. — Collateral Register. 




uK.o-maX/a 



w 



LOAN 



COLLATERAL 



VALUE 



DEPOSITOR'S RECEIPT 



■ ■"f'' 



SOOO 




&u /*f £$.=%/ 37 <f 



R£L 



S^tlfj^ob 



if. Mltf* f*nt-zt*A 



j££J. OLteLfl+fJb, «$.$. fiftjttAt itof 



g SS.S 



Fig. 176. — Collateral Register. 

of collateral of each loan for possible changes in collateral; but on this 
form it is not possible to group together all the collaterals of each 
customer. 

Some companies keep a ''Loan Accession Book," which is a register 
of collateral loans in the order in which they are received, being similar 
in principle to a register of bills discounted, a form of which is shown 
in figure 194. Spaces are provided for the date, name of borrower, due- 
date, rate, amount and list of collateral. 



Real Estate Mortgage Loans. 

Applicants for loans to be secured by mortgages on real estate 
are required to fill out application blanks giving particulars regarding 



232 TRUST COMPANIES. 

the property to be mortgaged. This information is primarily for 
the purpose of enabling the company to locate and appraise the prop- 
erty; and secondarily- to bring to light any facts that might aid in 
forming an estimate of the desirability of the loan. Often the appli- 
cation itself shows that the loan would not be a desirable one, and the 
company is saved the trouble and expense of making an appraisal. The 
amount of information called for on the blank varies considerably with 
different companies. Sometimes the applicant is required to sign a 
formal order authorizing the company to make or procure a loan, and 
agreeing to pay all expenses incurred should the loan be declined. Other 
companies prefer to have an officer fill out the blank from verbal infor- 
mation given by the applicant, because the personal interview often 
brings out important information that would not be shown in a written 
application. Figure 177 shows a short form of application blank. This 
is printed on card-board; and after the property has been appraised the 



Strttt 

B S 6-3-8-5 



•J^CmAX Ho/32±!X Dtmaulcu ^O F„t FroM X / 7 vC F„i tWp UpcAJ sm. „, «•„ 



REAL ESTATE LOAN APPLICATION 



hkkl 



Occupation AvAAA^^^A APPLICANTS ESTIMATE 



Amount Waaltd iX-STOP .— R«tt 6 % Tim, lyfr. \jttt zfedfsi h V»'"« "* 1 "^ j % Q&&. 






* 



1£Q. 



Dttcrlptlon of Bulldiim 7 Hgnv^ /lX-4Xt r7> ~0^\ cA^jLk-*^Tn Valu« of B'ld'p S V-^Ot? , 



3oo 



huurgee &QQQ ~ ToUl Vtlmtion « (c^OQ. 



Sosrc 



Sab-Lot No. I £~S Sub-Dtvlilon O^ff^ -riCTzHK Ori«. Lot No. / /£ 2sp 

App«iwi by SW-IU^ ^y^^uk, Prtt ^/a^o (q -b*ZL- ^"Qfe ^ ,* 

oven 

Fig. 177. — Real Estate Loan Application Card. 

cards are filed alphabetically by names of streets. In time these card- 
files become valuable sources of information as to property values in the 
various localities in which the company makes such loans. On the back 
of the card is shown a plat of the property and any remarks the ap- 
praisers see fit to record. 

Figure 178 shows a longer form of application blank, this being 
printed on a sheet of paper 14 by 8% inches in size. 

After the appraisers have made their report, the application goes 
before the finance committee for approval or rejection; and, if ap- 
proved, the papers are signed and acknowledged, and the mortgage put 
on record. The abstract is then ordered extended to include the mort- 
gage, and is examined and approved by the company's attorney before 
the proceeds of the loan are paid to the borrower. If the examination 
shows an unsatisfactory title, the loan is not made, and the mortgage is 
cancelled of record. If prior liens are shown, these must of course be 
removed before the loan is made. 



FORMS FOR BANKING DEPARTMENT. 28$ 

SECURITY TRUST COMPANY, 

N. E. Cor. Third and Market Streets, Camden, N. J. 

Telephone 362. _ <— _ 

^J— hereby authorize the SECURITY TRUST COMPANY, of Camden, to procure for ^ A ^-^ 

a loan of AM><> JEgL o^^&^^gL Dollars $%&OOjT /or -^fr ^^r- years nt C? 

per cent, interest per annum, payable semi annually, on mortgage on the folloiving described property and 

\J agree to have all necessary legal papers prepared and recorded at ^^f own cost, and should title 

prove defective, or application be withdrawn after papers are begun __M agree to pay for all- expenses incurred. 

Bondsman : Mp ^V^jU- ^ . ^ ^ ^^ - Occupation - ^^^^X T. 

Location of(Proj/erty— I ^^ %k£&LJ*±*A ^ ._ 

Dimensions of Grounds &^~~ A — l^-Cy hCjiqJC~~ — rj — . 

Description of P-tH'-™ ^ /£fcmj XTY^K cU^JJcC ^ t- ) OWk<_ /->r,n^ ; /dL&h. r^ 

_ — . 1 present condition ~^6~&eL- when built /tiff 

Value of Ground (exclusive of Buildings) present worth in Cash J / f-f-O"^ . 

Value of Buildings (exclusive of Ground) present worth in Cash $ t-f-Q-Q—Q . 

If offered at Public Sale now I believe this property would bring at least $ t-f-CrQ-Q . 

Occupied as _£U_ J3^^yJ0^<r^ _ : Insu-ed for 1 3 QO-g) °^ 

Annual Rent at — " Assessed Value $ / StO~Q r~ 

Is property incumbered in any way ? ' vOt ._ 



Dated 



Q^vig r \ ) nolo , 



Send photographs of premises 
ifposs%bU r unmounted 



(Signed) 




(^LvA_X-g^L_ 



C^. U)c£t^py\, 



Applicant. 



.U3gu>lJL 




We have examined the above described property of 



We nave examined the above described pr 
located in fcy QJltr 0& (-£L^w <^L^ 

said property is 




O? [JoifagW 



.County m ^--Ct^^Xi; 



that sum, if offered for sale. 



and State of 

_and of which the foregoing is a just and fair description, and are of the opinion that 
worth at least -fi-r*)--v^y~ /Cf\r>—^i^-a^>'^ v — — - — dollars, and would bring 



The ground is worth 

The improvements are worth . 



$ f3jy-o°s 



$3l0~-o™ 



Dated 



__0 ^1 . 



& 



Total 



.iqOlo 






Fig. 178. — Real Estate Loan Application Sheet. 



16 



231 



TRUST COMPANIES. 



There are several styles of notes used in connection with mortgage 
loans. One is a simple promissory note containing a memorandum of 
the fact that it is secured by a real estate mortgage, such as that shown 
in Figure 179- Another form is more elaborate, and is accompanied by 
interest coupon notes. The mortgagors sign both the original note and 
the interest coupons ; and the latter being in the form of notes are col- 
lected at maturity in the same manner as any note, thus making it un- 



l sXSJtQE 



On\JL yljiAA, 



CLEVELAND, O 



tf 



; — after date 




— promlae to pay to the order of 



Gbe Cleveiatto Zvust Company «t it^iee— 



for value retfelvid, with Interest at the rmtt^t /&-<_C< 
and December of each year 



. DOLLARS 
-pef e»n s per annum, .payable quarterly on the 1 5U> daya of. March. -JJrte.September 



,_UnJo_r 



MORTGAGE NOTE R 60-3-X-S 






Fig. 179. — Mortgage Note. 



JZ &oo" 



JM//. 



1 



mmM/jfeamjx/j i^o C^,/ — ^— J- 



" TUa^Jniib^^ I lA r n JVOG 



O 









/ a/ukud'L 



^t" — ^r-iaenfat 



w(£ffije//>n//de' 



'/A 






*O^WAj^as 


















LzLui-i^ O, vVT' 



CThJL, 



0/V.lcxA-M (£y- Sifcn^u 



Fig. 180. — Mortgage Note. 



FORMS FOR BANKING DEPARTMENT. 



235 



necessary to send interest notices. A form of such a note is shown in 
Figure 180, and one of the accompanying interest coupons is shown in 
Figure 181. This particular form of note and coupon is used for mort- 
gages on farm property. Figure 1 82 gives another form of interest 
coupon. 

The form of note with interest coupons is well adapted to loans 
which are to run for a considerable period, and particularly to loans 




Fig. 181. — Interest Coupon to Accompany Mortgage Note Shown in Fig. 180. 

made with a view to selling them to investors — a business which is stead- 
ily growing in volume, and which some companies make a specialty. 
The shorter form of note is better adapted to loans which are to run for 
a comparatively brief period, or which the mortgagor is to have the 
privilege of paying in part or in full at his option after a certain date. 
It is a common practice to make such notes for one year, and to carry 
them after maturity as demand obligations. 



! WW¥MW W WW rtnW| WW | H?ff^ 




^UrJ^^A^O^i^ L% 190 (o 
— 19 0_K_ for value received,iiSZpron)ise to pay to 



@t) tl)e first dey of -J^UrdP^^ 

bearer aithe office ofTHE GUARANTEE TITLE awdTRUST C0MPAN&U) Glevel&o d ,01)io. 

tl)e sun) of ..OX^^b-^^^JVr^L^d 

being Merest on Note N*Sbll £> £"& 



Df$* 



iQ&ZT- dated- 



Dollars. 

%JLs^J!l-==- 19.o4 



This coupon note shall tear interest al eiqbt per centuri) per cainum after meduritv 




Fig. 182. — Interest Coupon to Accompany Mortgage Note. 

In Figure 183 is shown a form of mortgage note used in New York 
and elsewhere, and known as a bond. The document is a folded sheet, 
containing four pages, of which only the first is shown in the figure. 
On the second page provision is made for the acknowledgments of the 
makers and the witnesses of the instrument. The third page provides 
forms for the record of interest payments and payments on principal, 
and the last page is the cover. 



236 



TRUST COMPANIES. 



Bond. -No. 674. 



*ohh h. with, *o-m mmr *t., n. % 



KNOW ALL MEN BY THESE PRESENTS, 



That i, tfillian H. Kantelle, 



hereinafter designated as the obligor , do hereby acknowledge Hyself 

indebted to 



The Title Guarantee and Trust Company, 



to be 




hereinafter designated as the obligee, in the sum of three thOU sand 



dollars, lawful money of the United States, which sum 1 the said obligor do hereby 

covenant to pay to said obligee, 
its SUCCeSCCi^- or assigns, on 

the twentieth dayof April niueteen 

hundred and ten , with interest thereon, to be computed from the 
tv;cntieth dayof April , 190 6, at the rate of six 
per centum per annum, and to be paid on the twentieth day of October 
next ensuing the date hereof, and semi-annually thereafter. « 



AND IT IS HEREBY EXPRESSLY AGREED THAT the whole of said principal sum 
shall become due at the option of said obligee after default in the payment of interest for thirty 
days, or after default in the payment of any tax or assessment for thirty days. All of the 
covenants and agreements made by the said obligor in the mortgage covering premises 
therein described and collateral hereto, are hereby made part of this instrument. 

Signed and sealed this twentieth dayof April ,1906- 



In the presence of 






Fig. 183. — Mortgage Bokd. 



FORMS FOR BANKING DEPARTMENT. 237 

The form of mortgage varies somewhat in different localities, but the 
following wording of an Ohio form shows all of the essential features: 

MORTGAGE DEED. 

KNOW ALL MEN BY THESE PRESENTS 



That 



the GRANTOR for the 

CONSIDERATION of DOLLARS, 

($ ) received to full satisfaction of The Blank Trust 

Company, the GRANTEE, do GIVE, GRANT, BARGAIN, SELL AND 
CONFIRM unto the said GRANTEE, its successors and assigns, the 

following described premises : Situated in the 

of County of , and State of Ohio, 

and known as 

be the same more or less, but subject to all legal highways. TO 
HAVE AND TO HOLD, the above granted and bargained premises, 
with the appurtenances thereunto belonging unto the said GRANTEE, 

its successors and assigns, forever. And , the said GRANT- 

OR do for and heirs, executors and adminis- ' 

trators, covenant with the GRANTEE, its successors and assigns, that 

at and until the ensealing of these Presents well seized 

of the above described PREMISES as a good and indefeasible estate 
in FEE SIMPLE, and have good right to bargain and sell the same 
in manner and form as above written; that the same are FREE AND 
CLEAR FROM ALL INCUMBRANCES whatsoever, 



and that will WARRANT AND DEFEND said premises, 

with the appurtenances thereunto 'belonging, to the said GRANTEE, 
its successors and assigns forever, against all lawful claims and de- 
mands whatsoever , 

And the said 

of said 

do hereby REMISE, RELEASE AND FOREVER QUIT CLAIM unto 

the said GRANTEE, its successors and assigns, all right 

and title of DOWER in the above described premises. 

THE CONDITIONS OF THIS DEED ARE SUCH, That, whereas, 
the said 

ha. .. .executed and delivered to the said The Blank Trust Company, 

promissory note dated 

for the sum of DOLLARS, 

payable to its order 

after date, with interest at the rate of per cent, per annum, 

payable quarterly, on the Fifteenth days of March, June, September 
and December of each year until paid; principal and interest being 
payable at its office, and all overdue interest bearing interest at the 

rate of per cent, per annum, payable quarterly until paid; 

and ha agreed to keep the buildings on said premises, at all 

times until payment of said note, insured against loss or damage by 

fire, in the sum of at least $ and under policies approved 

by and deposited with the Grantee and which shall provide for the 
payment of any loss under the same to the Grantee or its assigns as 
its or their interest may appear; and ha.... also agreed to pay all 
taxes and assessments levied on said premises as the same become 
due and payable; and ha.... also agreed that if such insurance be not 
so procured, or such taxes or assessments so paid, that the Grantee 

or its assigns may procure or pay the same, and that will on 

demand pay to it or them, the cost of such insurance or amount paid 
for taxes or assessments, with interest thereon at the rate of eight 
per cent, per annum. 

AND GRANTOR. ..AGREE. .. , that if any taxes or assessments on 
said premises or any installment of interest or principal of said 

note or premium of insurance, as herein provided for, be not paid 

when due or within fifteen days thereafter, then said entire principal 
shall also 'become due and payable at the option of the holder of this 
mortgage, and also that upon any such default, the holder hereof 
may take possession of said premises, rent the same, and collect all 
rents accruing on leases thereof, and after deducting its reasonable 

charges therefor, apply the proceeds to the payment of said note 

or to the performance of any of the agreements above recited and 
may so continue to do until full payment and performance shall have 
been thus effected. 



238 TRUST COMPANIES. 

Now, if the said 

heirs, assigns, executors or administrators, shall well and truly pay 
the aforesaid note.... and interest thereon to the said The Blank Trust 
Company, its successors or assigns, and perform the several conditions 
above recited, then the above DEED shall be void; otherwise the same 
shall remain in full force and virtue in law. 

IN WITNESS WHEREOF hereunto set hand 

at Ohio, this day of 

in the year of our Lord One Thousand Nine 

Hundred and 

SIGNED, AND ACKNOWLEDGED 

IN PRESENCE OF 



THE STATE OF OHIO, 

ss. 
, County, 



BEFORE ME, a in and for said County, 

personally appeared the above named 

, who acknowledged 

that did sign the foregoing instrument, and that the same is 

free act and deed 

IN TESTIMONY WHEREOF, I have hereunto set my hand and 

official seal, at this 

day of A. D. 190 



A common form for the satisfaction of a mortgage is as follows: 
'"The conditions of this mortgage have been complied with, and the same 
is hereby satisfied and discharged." This is usually printed on the back 
of the mortgage, ready for use when wanted. A form for the assign- 
ment of a mortgage reads thus: "For a valuable consideration, the re- 
ceipt whereof is hereby acknowledged, The Blank Trust Company here- 
by sells, assigns and transfers unto all its right, title 

and interest in and to the within mortgage and the obligation secured 
thereby. " 

Journal records regarding mortgage loans are made on the journal 
already shown, in Figure 16'3; or, if no loan journal is kept, are entered 
upon the general journal in the same manner as records of collateral 
loans. In either case, the total figures for each day are of course recorded 
on the general books. The ledger forms may be similar to those shown 
for collateral loans, except of course that a description of the real prop- 
erty mortgaged is substituted for the description of collateral. The form 
of ledger will* depend somewhat upon the local usages regarding real 
estate, and also upon whether the loans are usually upon city or country 
property. Figure 184 gives the form of a ledger card uniform in size 
and style with the collateral loan ledger cards shown in Figures 164 and 
167- The size of the card is 5 by 8 inches. The interest record is given 
on the back of the card, and is the same form as that given in Figure 
168. A plat of the property, together with other information for which 



FORMS FOR BANKING DEPARTMENT. 



239 




o. uJ7wcg~ 



REAL ESTATE LOAN N«. / 2-J <J 



tJlOJjQLniut -I M^r, Qu e /lo/oj n.rr (gjg ,~ T 0UE _. 



. vS"0 , l(o2, tmtmmipm^^ SlUnsJyMjtpC &{~ . 


io 


K 


oL 





r> o 






«..., 


* 


1 


)|— 


» 


. AU.0T. OS StlRDIV. *UaA^4 


APPSAISEO 11 Sft-^-ey^ /&&\S 


u 


U 


ol 








/ 


SOO 




/ 






SOB-IOT HI) 3. 3 


UHD PEB FT. iSnO » JS^OO, 


























nsir. IDT Kl>. />S> 


SUILDINCS «i«S"0 O 


























»"»""" «" "7^ pads /y 


row \l4O0n, 
























- 




























iNSu»Nct Qoiit^j^l^Qi, <fO& i3.0OO— wi'-HiSlnk 




















































































































































































































































1 

















Fig. 184. — Mortgage Ledger Card. 



bonsop U)oti^r "^^Ua^y (£Lc<£L«U 

MORTGAGE OP (L&* ^ 

to . ajL aU^yjc d^ui- 



RECORDED 
Regoueri office Liber ^ P.ge D.te 



INTEREST 



^q> 



JA 



itl3. 



i*t 



Qfl-n- Od-1 



sooo 



Hoi. 






M; 



Till. Polio. No aaM 



auaaia p °' icv No - 



Scction I ? 



V°'""« lit 



Block M- 



Lot i q<s 



Street No. 3SiT^ QrvT>~-Jc£ £-f . 



. „j v.i„AcK>-f>. 



n.,v.,„>*IISfrO. S-! 



J 3 



UAr Sg 




DESCRIPTION OP BUILDING 



&Kajj. /SCttrru. JlrnxA. cL. 



Ecrr-u, xr 



£2=^ 



gj /-jXttl.-- 



/j-yu. c^ 



T^ 



fl^er-.P-itim .iedV^ae'lM-tVO-O. ~ — tliln-S" 



Anoroved by ^tXtJ.^ Ig^v . 



IB. (R.eC.S. 



T.iffl Puiil uj , ' 



+IiImt l^cdh^(RjcJL^rJi. 3SS >Ww-tf^y. 



Wetet RMe. Pud 



A«~»rn»»'« P'*' 1 !___ 



DueT..Se«r ch HIllOS' 



T.e Record Folio ?i p-^j 



AMOUNT REQUIRED il&'O-O ~ 



Company Iosarina; 



No Policy Expire* Amount 



R BM ARKS 



(h-i^L/ 



I3-SU-I3 



Ui^ 



-aaifci±t3 



&t 



£ad_ 



w-s-bn* 



^ 



i'So-O 



Fig. 185. — Mortgage Loan Ledges Sheet. 



240 TRUST COMPANIES. 

there is not room on the card, may be given either on the loan envelope 
shown in Figure 186, or on a sheet contained in the envelope. These 
ledger cards and the loose leaves shown in figure 185 are filed in alpha- 
betical order, so that no separate index of the loans is required, as is 
the case when a bound book is used. In Figure 185 is given a loose-leaf 
ledger form 15 by 13^ inches in size, which provides space for more 
elaborate information. The arrangement of the items could be improved, 
but the form shows the information called for. 

The various papers connected with the loan, including the note, mort- 
gage, abstract and insurance policies, are placed in an envelope made of 
manila or other strong paper; and the envelopes are filed in alphabetical 
order (or numerical order, if preferred) in cases like those already de- 
scribed for collateral loans. Figure 1 86 shows the face of such an en- 
velope. 

There is frequently occasion to release a portion of the property 
covered by a mortgage, upon payment of a part of the loan. A stand- 
ard form of release reads as follows: 

RELEASE. 

For a valuable consideration, The Blank Trust Company heieby 
releases from the lien and operation of a certain mortgage from 

to the said The Blank Trust Company, and recorded in Vol 

on Page , County Records, so much of the 

property therein described as is known and described as follows, viz: 



without, 

however, invalidating the lien of said Mortgage upon the remainder 
of the land therein described. 

Signed this day of : A. D 

THE BLANK TRUST COMPANY. 
In presence of 
By 



THE STATE OF 

County. 

Before me, a Notary Public, in and for said county, personally 
appeared the above named The Blank Trust Company, by 

of the said Company, who acknowledged that they and by them as its 
officers The Blank Trust Company did sign and seal the foregoing 
instrument, and that the same is the free act and deed of the said 
The Blank Trust Company and of themselves as such officers. 

IN TESTIMONY WHEREOF, I have hereunto set my hand and 

official seal at this 

day of A. D 



Notary Public. 

Miscellaneous Loan Forms. 

When a payment is made on a note it is sufficient to endorse on its 
back the word "Paid," with the amount of payment and the date thereof. 
It is a convenience, however, to have a rubber stamp for this purpose, 



FORMS FOR BANKING DEPARTMENT. 



241 




REAL ESTATE MORTGAGE LOAN No. 
DATE_^^oi..^^Z£<2^__jU«OUNT * 3 2-<>€>~ 



I ^7 PEET. 
KNOWN ^^^37 6\( XLSL. d u^.. 
nun niNftfi /£> f-ravi^- Zry^cftL 



ALLOT OB SUB DIV 


/WjX<L(?>v^L 




SUB LOT No. / O 


orig iotno. 1 &nr 




ARSTRAP.T I/' 


INSIIBiNrF 1^- 












Fig. 186. — Envelope for Mortgage Loan Papers. 

showing the balance due after the payment, so that such balance may be 
seen at any time without having to stop to figure up the total of pay- 
ments made. Figure 187 shows a form of such a stamp. 

The loan department should keep a special tickler for its work. The 
old-time bound book tickler may be used, but cards are much more con- 
venient. Figure 188 gives a form of tickler card for maturities of time 



[6Jo(o f^ ; d on wrmtN loan $&OQ 

BALANCE D0£ $.!&£QjQj^Z 



CO 



Fig. 187. — Stamp for Endorsement of Payments on Notes. 



time loans Due 



B14 5-2-5 



v3 j^fiA(2. -\\aJt\t o m «*q(o 



NUMBER 


MAKER 


AMOUNT 




'3W6 


^r-/U.. <^-1lLu~ DlJLs^ 


..a 





O 


O 








:'J 1 










































































































r 


• 





nc 


E E 


QU 


PMEK 


■ CO 



Fig. 188.— Time Loan Tickler Card. 



242 TRUST COMPANIES. 

loans. A form of tickler card for insurance expirations has been shown 
in Figure 26. 

Notices of interest due on loans should be sent to borrowers ten days 
or two weeks before such interest is payable. These notices need state 
only the total amount of the interest and the due-date; but it is more 
satisfactory to the borrower, and therefore often saves time in the end, to 
send a detailed statement, showing the principal, time, rate and amount 
of interest for each item. Figure 189 shows such an interest statement. 
When payment is made, the notice is stamped "Paid," and serves as the 
customer's receipt. Figure 190 shows a form having a stub attached 



THE INTERE8T ON YOUR REAL ESTATE LOAN WILL BE OUE JUNE L5. 1906 
KINOLY SEND YOUR CHECK IN ACCORDANCE WITH THE STATEMENT BELOW. 

STATEMENT 

AMOUNT MO»8 OAY8 RATE INTEREST 

$4000. 6 6$ #120. 



PLEASE PRESENT THIS STATEMENT WITH YOUR PAYMENT. 

B 8-5-5-6 

Fig. 189. — Interest Notice. 



which is a convenience when a large number of interest payments are 
received in a short time. When the payment is made, the teller simply 
stamps the notice "Paid" with a rubber stamp bearing the date, tears off 
the stub and places same on a spindle. This makes it unnecessary to stop 
at the time to make a book entry of the payment; provided, of course, 
the customer remembers to bring the notice with him. 



FORMS FOR BANKING DEPARTMENT. 



243 



Figure 191 shows a form used for the record of interest due at the 
regular interest periods. The names of the borrowers are arranged in 
alphabetical order, and the sheets are filed in a loose-leaf binder. The 
details of the interest on each loan are shown, and from these sheets the 
stenographer copies the matter for the interest notices sent to borrowers. 
When the customer calls to pay his interest and has failed to bring the 



Wv- g-v/ i/y^ - ('■^vwAX^ r 



COLI.ATERA1. 



no. a.i i if 






No.ifc/>s: 


A„om, 3M-.I 3 




NO. 


AMOUNT "7. / 3 I 


^ 


.No. 


AMOUNT 




.NO. 


AMOUNT 





Do Not Detach This Stub 



The Citizens Savings & Trust Company 

CITIZENS III II.DINX, ■ 



(IWvur yx.*^- 



Ci.EVBi.ANn, Ohio. Jixr ao. 1906 



3m^~ C^oic 



THE INTEREST ON VOBR COLLATERAL IX)AX Or « <Q ^ />lV~^- 

AMOUNTING TO 8 — | " , — 



»1LI. BE TJI'IJ .II'LV I. II 



PtJEASE REMIT <>>" OR HEFORK THAT DATE 

RESPECTFII.I.V 



E. V. IIAI.E. Thh.vmvreo 



Bring This Notice With You 



Fig. 190. — Interest Notice. 



interest notice, the amount due from him is easily ascertained from these 
sheets. In the last column, headed "Date Paid/' the date of payment 
is stamped with a dating-stamp. The amounts in the column headed 
"Total Loans" furnish a trial balance of the loans on the date when the 
statement is made up. 

Some companies keep a loan book in which are entered all loans in 
the order in which they are made. A form of this book is shown in Fig- 



Interest due on 



CKjLeuL LAAqJs Loan 



AT- 



iqO< 



2£2 



0LllHJt<hA.OA 



34- 



js_ 



/«S" 



1134 



Cl/Ux^jjdL <*~* <y/w 



Za. 



<sk 



JSl 



Oj^C 



ua 



£2 



_._ 



3^6 I 



_£^ 



•Ju 



^i±3£i 



H 



OQ 



4 Sac 



JLti 



2J± 



sac 



±o 



^sas. 



3*<?^ 



A*. 



C Q 



jSecc 



■S ocio 



±1 



'Xlt^O 



0~JAaa > Q/^jJUsr 



-& 



Jt& 



in 



i£ 



Fig. 191. — Sheet for Figuring Interest on Loans. 



lire 192. The loans are numbered in consecutive order without regard 
to their kind, real estate, demand collateral and time collateral loans 
being included, as well as discounts in cases where a discount business is 
conducted. This book is used principally by those companies which do 
not use a separate loan journal. When the latter is used the loan book 
is superfluous. 



244 



TRUST COMPANIES. 





" 


M A K e "R 


SEC u-S 1 T y 


KINT> 


AMOUNT 


Ti»i6 


*.u 


~R £ M A -R K S 




fat 


.T 


37flL 






<* f 


; 






/tT 


r 










' V7^ 




















" 


•3n&£ 


£U*£^r- <?-. 'TKju*.^ 


. J" Itt U S iv^p. tf-'i V 113^ 




1+&-SO 




A 


■ r T 






























'• 


37K. 


U).<S W-J^C^vC-^vv . 


sn*£ (h£.'3<L< J J-<%*~Q>. 




1 


too 




fod< 


t 













































































Fig. 192. — Loan Book. 

At each meeting of the executive committee, or finance committee, or 
whatever committee has the supervision of loans, a list of all loans made 
since the last meeting of the committee is submitted, and the list is for- 
mally approved by the members of the committee placing their signatures 

RECORD OF LOANS MADE k'oh. % 190G TQ 1.?ch. 6, 1 000. 



MAKER 



'•Villian and Annie Sr.ith 
Janes S. Thompson 
Doe and Roe 

/. P. cooXe 3 

S. M. and Mary R. Wild 



40 by 136 ft. iOTra St. 
20 sh. >!. Y. C. & H. R. 

6M SSaithville Tr. Co. 

inds. 
100 sh. do. pfd. 

2 a Ohio. A n.'.v. e>:t. 4<ji 1 

51 by 175 ft. Clifford Jitg 




APPROVED 



EXECUTIVE 
COMMITTEE 



Fig. 193. — Form for Report to Executive Committee. 



FORMS FOR BANKING DEPARTMENT. 



245 



on the page. This record is a part of the minutes of the committee. In 
some companies the list is typewritten on a blank sheet or sheets of paper, 
which are filed in a loose-leaf binder. Figuure 193 shows a printed form 
for this use. 

Bills Discounted. 

Although trust companies are in many states forbidden to discount 
paper, there are several states in which they are permitted to handle 
this business, and the necessary forms are therefore included here. 

By some companies all applications for discounts are entered in an 
"Offering Book/' wherein are shown the maker or makers of each note, 
the endorsers, the name of the person or firm by whom the discount is 
desired, the amount and time of the note, and any remarks which will aid 
in forming a judgment as to the desirability of the paper. A column is 
also provided in which to note whether the paper is accepted or rejected. 
But many companies dispense with the use of this book, and depend for 
this record upon the minutes of the finance committee. 

When paper offered for discount has been accepted, it is entered in 
the Discount Register, a form of which is shown in Figure 194. This 
record shows all necessary data regarding each note. The notes are en- 



REGTSTER OF 



DISCOUNTED BILLS 




Fig. 194. — Discount Register. 



tered in the order in which they are received, and are numbered in con- 
secutive order, the numbers being written or printed in the register, and 
from there copied on the notes. 

At the close of the day the columns of the register showing the 
amounts of bills discounted and of discount or interest are footed for the 
day's work, and the totals are usually entered in the general journal 
directly from the register, although some companies prefer to have each 
note entered separately in the general journal from debit tickets fur 
nished by the discount clerk. The credits for the Bills Discounted ac 
count on the general books are generally made from credit tickets fur- 
nished by the discount clerk; but discount registers are in use which 
provide for the record of discounts paid. If such a register is used, the 
general bookkeeper gets the total credits, as well as the total debits, foi 
the Bills Discounted account directly from the register. 

After a note has been entered in the register, a memorandum of its 
due date should be made in the discount tickler, a common form of which 
is shown in Figure 195. If preferred a card tickler may be used instead 
of the book. 

The note should next be entered in the Discount Line Ledger (also 
called the Customer's Liability Ledger), three different forms of which 



246 



TRUST COMPANIES. 



FORM NO. 3S. 



DISCOUNT TICKLER 

THURSDAY-... 190 



PATER 



ADDRESS. 



Endorser ob Collathul. Amoxtst. Iht 



REMARKS 



Fig. 195. — Discount Tickler. 

are shown in Figures 196, 197 and 198. The headings of the columns 
make these figures self-explanatory. It will be noted that the ledger 
shown in Figure 197 separates accommodation and commercial paper, 
while that shown in Figure 198 separates paper on which the customer is 
maker from that on which he is endorser. The object of this record 
is to show the amount of paper that is being carried for each customer, 
sc as to prevent any one from getting more than his proper amount of 
credit; and also to show the kind of paper usually offered by the customer 
and the parties whose paper he handles. 









UJod-b^a 


Si 


1.VA. 7^T\- 




























Ml. 


HAACR. 


SECURITY 


i 


i 


i 


I 


: 


1 


1 


§ 


s 


c 


1 


s 


CHAR9ES 


BALANCE. 


CREDITS. 


WHEM PAID. 




3H1& 


wn wiv *^ i*J~Kito~ 


$Xh&,<jZ.s m J£ 






'7 






















?~<r r> 






?^-o 






WO 




<W*. 


'1 




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lo. 






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to 
















'At— *-* lAlts 


A*. 










}(, 


















Z.O o 






i 3 & 


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3<"ST 


ft. «. Lo-o-o-eL 


i-a. 








r 1 '? 




















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Fig. 196. — Like Ledger. 



LINE LEDGER 








c.„ 


>y-.« 


1 | ! 


«««.««« 


„.»« 


1 


"r 


„ 


D.T.. 




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yi 








,' 


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ipj; 




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f«f 












« 










ttai 




• 




M4 






















%;4. lo-kJtx 


JLo. 








■.■; 
































fri-S 










. 












. e^i^^-cvrfUu. 


<*<. 






























i 


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I 


<« 5 




















1' 


A* 


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t 


rt 


isr 










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; 




























































































































• 






























































I 



Fig. 197. — Line Ledger. 



E7 Wo I— 



ACCOUNT No 



**%—. 





























-Im.j^, (^ 'llAjlb-\, 




























sj_ 






AS MAKER 


J^ 


n 


PARTICULARS 


"T?,V 


'•"'r 


AS ENDORSER 






0. 


0. 


»■» 


»«"•«■ 


"-"» 


«~»" 1 -" 


in 


» 


um 


■UUM. 






J7«s 










'kjrL 




sjz 


3f 


'/a/,/ 


43*1 


iouw£. Wxrf t - 




JU 


,, 


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II s 










'Mil 




if* 


■r 


'/xc/06 


3->1$ 


J A.. 


M J &. O 1. My, 1 


;./.-/'. 


(5 














































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"W 


OiXl-OfcrM, v^Jrvw^v 


y~.^<%. ittUl.t- 


in./! 








'-/ "•" 










'/'*{ 




P-a^ 














m 








-31 < 






"11 


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Fig. 198. — Line Ledger. 



FORMS FOB BANKING DEPARTMENT. 



247 



s 



to the order of S^ Aoy>X^L_vX 




Cleveland, O.—^U^hJ^JU—-=-—\90i 

.after &a*e_\-Z promise to pay 



: rkjnJLsi/ 'AJU/VlX'UL-X- CV>x-lL 




:Dollars> 



r> rcfof c 'i-fr+KjJdL J a A; ST ^Vw^^y v Value received, with interest 

at_Jye_per cent, per annum, payable^^^^-annually, 

= Dae ^\oL> (J 



No. 



Fig. 199. — Common Form of Note. 



To the- 



JVame (Corporate style under charter} .... - - 

Business - 

Location - Branches 

For the purpose of procuring credit from time to time from you for our negotiable paper or otherwise, we furnish you 
■with the folio-wing statement -which fully and truly sets forth our financial condition on the day of 

190 '.._./ -which statement you can consider as continuing to be full and accurate unless 

notice tf change is given you. We agree to notify you promptly of any change that materially reduces our pecuniary 
responsibility 
In consideration of the granting of such credit, -we agree that if -we at any time stop payment or become insolvent, or 
commit an Act of Bankruptcy, or if any of the representations made below prove to be untrue, or ifwefdil to notify 
you of any material change as above agreed, then and in either such case all our obligations held by you shall immed- 
iately become due and payable without demand or notice, and the same may be charged against the balance of any 
deposit account kept by us with you, we hereby giving a continuing lien upon' such balance of deposit account from 
time to time existing to secure all our obligations held by you. 



ASSETS. 



Cash in Bank 

Cash on hand 

Bills Receivable, good.. 

Accounts Receivable, good ^ •_ 

Bills or Accounts Receivable, owing by Officers 

Merchandise, finished (How Valued ) 

Merchandise, unfinished (How Valued ). 

Raw Material, (How Valued ) 

Real Estate 



Machinery and Fixtures 

., f 



Total. 



LIABILITIES 



Bills Payable for Merchandise 

Bills Payable to own Banks 

Bills Payable for Paper Sold 

Open Accounts 

Bonded Debt (When due 

Interest on Bonded Debt 

Mortgages or Liens on Real Estate . 

Chattel Mortgages 

Deposits of Moneys with us._ 

m -A r 



TotaJ Liabilities 

Capital _ 

Surplus, incfoding Undivided Profits': 



Total. 



Contingent Liability. 



I Accommodation Endorsements. 



Endorsed Bills Receivable Outstanding. 



Specify any of above assets or, liabilities pledged as, or secured by, collateral, and state collateral,. 



Fig. 200. — Form fob Statements of Borrowers. 



248 TRUST COMPANIES. 

A common form of a note is shown in Figure 199- 

Applicants for discounts are usually required to fill out statements 
showing the condition of their business, as a means of determining the 
amount of credit, if any, which it is safe to give them. A standard form 
for such statements has been adopted by the American Bankers' Associa 
tion, which is shown in Figure 200. This form is for the use of corpora- 
tions asking for accommodation. The form for individuals and partner- 
ships is much the same, except that it omits the items applicable only to 
corporations. 

CAPITAL. 

Authorized Subscribed Paid in 

Held by Company as Treasury Stock 

How paid in: Cash $ Other Property - 

Description of other property and how valued • 

What portion of Real Estate, if any, haB been acquired through bad debts _. — 

In whose name is title to Real Estate held 

Incorporated in what State and under what general Law or Special Act -- 

Date of Charter _ Commenced Business — 

Are Stockholders liable beyond amount of stock subscribed If so, to what extent - 

Amount of annual' business Vnnual Expenses Anuual Dividends 

When was last Dividend declared Rate . 

Insurance carried on Merchandise ..Real Estate : 

Is Mortgage above stated a first lien on all the assets .- : 

Regular times of taking inventory _ 

Give basis of statement, whether actual inventory, by whom ( 

taken and date, or if estimate, by whom made and date. (^ 

What amount, if any, of Accts. and Bills Rec. not charged off, is past due, extended or renewed. ;_,„_ - 

Amount charged off for bad debts last year Amount recovered during same period.. 

Amount charged off account of plant preceding year 

State last date of taking trial balance and if sama proved. Regular times of balancing books 

Number of Bank Accounts and where kept . - 



OFFICERS. 



NAME IN FULL. 



President 

Vice President 
Secretary ..,.__ 
Treasurer 



ADDRESS. 



DIRECTORS. 



NAME IN FULL. 



ADDRESS. 



Please Sign Company's Name here - 

By 

Date Signed 190... 

Fig. 200. — Form for Statements of Borrowers (Continued). 



FORMS FOR BANKING DEPARTMENT. 



249 



The determination of lines of credit is a difficult task, and if done on 
a large scale requires a special equipment. The larger banks maintain 
separate credit departments devoted to this work and furnished with 
ample equipment. The subject belongs to a treatise on commercial bank- 
ing rather than the work of the trust company, and readers interested 
are referred to discussions of the credit department of banks in current 
banking periodicals and in published books on the subject. 

Investment Records. 

To a larger extent than banks, trust companies usually invest a por- 
tion of their funds in bonds and standard stocks. Journal records of 



^JU^o^^^T^d^. fc a^ff. 



INVESTMENT No JJ[^-&— 



.»»«/7f7 



iMTinesr on Dmoen 



Ju« > ./jhCt^v^ 



f <2«_JL 



Mo 



I Part 



s: 



Xoooc 



Jwvun. xii-z&8> 



ff.Vtt. 



l£d. 



4Tt 



n 



gfi 



Zij- 200 



Fig. 201. — Investment Ledger. 





:ss? C 3 . (k 3 ^P. 


(* 






















INT. OR DIVIDENDS DUE /jfci/>V. / 9f Sn aSL^ ( "ATE (o 10 


/ 1. r i 7 




MCMORANOA ^ 


D'JIt 


AMOUNT 


PAID 


AMOUNT 






± 


1 


0is> 




Loo 




! 


2. 


c(p 




io O 








X 


I 


Oic 




loo_ 




1 


/ 


oL 




Loo 










































































































































































>> « 



Fio. 909. — Record of Income on Investments. 



17 



250 



TRUST COMPANIES. 





National City Bank 


National Cemmerc'l 


Brul«i> S. 8. C 


. 


Pwpli'i Sir. lit 


i 


WMl Cln. Uf. U 




Eilt Ell OIDmC Id 


FtrwtWHS.k 


, 




FROM 


'««« 


FROM 


FROM 


PROW 


PROW 


PROM 




Star Trust Co 


;itar Truct Co 


Star Trust Co 


Ttar Trust Co 


Star Trust Co 


Star Trust Co. 


Star Trust C* 




•'«/#/** 


"AAt 


I'l&loC 




nlHoC 


.-J2IU^ 


* __ f _" 4 


fc-— .. - 




■3 I 
/3 

/o 


7<i 

30 

7< 


-> 


/ 

1 


II 6 

ft 

XI 6 


*7 
/ i 






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13 
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it 

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93 






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FROl 






























Will 


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Star T 












PROM 








































"ISlc 


6 












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PRO 


























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» — 






^ 


IStar Trust Co) 






•jus 


19 




"/6/0 










/H-f 


id 








^'» 


HC 




■ 






































- 








- 



Fig. 203. — Clearino-House List. 



FORMS FOR BANKING DEPARTMENT. 



251 




Fig. 203. — Clearing-House List (Continued). 



252 TRUST COMPANIES. 

such investments aye usually made in the general journal, although some 
companies use a special investment journal, the general arrangement of 
which is similar to the loan journal shown in Figure 163, separate col- 
umns being provided for Bonds, Stocks and Sundry Investments. The 
total amount of investments at any time is shown in the investment ac- 
count or accounts in the general ledger. Sometimes all investments are 
carried in one account, and sometimes separate accounts are carried for 
bonds and stocks. The detail of investments should be shown, except in 
small companies where the number of investments is small, in an invest- 
ment ledger, which may be either in book or card form. Figure 201 
shows the face and Figure 202 the back of a card form for this purpose. 
The face is devoted to a description of the securities and the ledger ac- 
count, while the income record appears upon the back. Book records are 
in use which follow much the same form, the upper part of the page 
containing the matter shown on the face of the card, and the lower part 
of the page providing for the income record. These records may be kept, 
according to local conditions, either by the general bookkeeper, the loan 
clerk or a junior officer. 

Clearing Checks. 

Trust companies, not being members of the clearing-houses (ex- 
cept in a few instances, as in Chicago), clear their checks through 
local national or state banks which are members of the clearing-house, 
and which act as their agents for that purpose. There are a few 
instances in which trust companies, having no arrangements for the 
clearing of checks through the clearing-house, are compelled to collect 
such items in the old way, by their own messengers. This is the case 
with those trust companies in New York which have withdrawn from 
the clearing-house privileges, and with Philadelphia trust companies. 

The clearing-house items are listed to the different local banks in the 
same way that members of the clearing-house list them — on large sheets 
having columns for the listing of checks under the names of the 
banks on which they are drawn. Figure 203 shows such a sheet. These 
sheets are usually bound in book form, and each alternate sheet has per- 
forations between the columns, so that the lists for the different banks 
may be torn out and delivered with the checks listed thereon. A piece 
of carbon paper is placed between the first and second sheets, so that one 
listing of the checks makes two copies. The first sheet remains bound 
in the book, and is a permanent record of the out-going "clearances." 
In the last column, headed "Sundry Items," are gathered the totals of 
all the other lists on the sheet; and this list of totals is sent to the clear- 
ing bank with the checks and the separate lists. 



FORMS FOR BANKING DEPARTMENT. 
» 

Collections. 



253 



While trust companies do not ordinarily handle the volume of collec- 
tion business that regular banks do, they find it necessary, if doing a 
commercial banking business, to take care of such collections as are 
brought to them by their depositors. For this purpose they do not, 
however, usually maintain specially equipped collection departments, 
but handle their out-of-town collections through the banks which act as 
their representatives in the local clearing-houses. Local collections are 
sometimes handled in the same way, but more usually are collected by 
the company's own messengers. 









COLLECTION 


















DATE RECEIVED 

iqr>b 


OUR No 


ACCOUNT OF 


DATE OF LETTER 


AMOUNT 


PAID 


RETURNED 


OUE 


.n/Lf. 


9 


3/ ^_so 


ScrzC^/ onW/^ 


''IsfoL 




!Afo 


s-q 


%nr. 


10 






Si-. 






9 


51 


( &KjTks~. ' M. - 0-^TW-pUr^/ 


5U 3. 




^ 








kffV. 


In 


7W, 


10 




•1 


52 


a.o i 


2\ 3 




/op 


2^ 










Si-. 








5i> 




























54 








— 


















55 





















Fig. 204a. — Collection Register, Left Page. 



REGISTER 



MAKER OR DRAWEE 



PAYABLE AT 






/2lf- r ( 'Jo-usCdi v£k 



Jfc-K; 



5o 



CLisis 



vY^tf- K-^atfci, 



<R . 9 Ol<^ ^Au 



S^>^~&,-> 



^p..~-' j< TLx^". 



Ftg. 204b. — Collection Register, Right Page. 

DOMESTIC COLLECTIONS. 




Fig. 205. — Register for Local Collections. 

As soon as an item for collection is received it is entered on the col- 
lection register, and given the • number indicated by its entry on the 
register. There are two general forms of this book, one being designed 
for "foreign" or out-of-town collections, and the other for local collec- 
tions. Figure 204 shows a form for the former, and Figure 205 for the 
latter. In cases where the number of collections is small, or where they 
are mostly foreign, the use of two forms is unnecessary, that shown in 
Figure 204 being readily adaptable to both kinds of collections. Some- 
times, where the business is very large, a special form of register is used 
for sight drafts. 



254 



TRUST COMPANIES. 



Time collections should be entered also in a tickler, under their due 
dates. The tickler may be a card form, such as has already been de- 
scribed (see Figures 24, 25 and 26), or it may be a bound book. Figure 
206 shows a common style of collection tickler in book form. It differs 
little from the discount tickler shown in Figure 195, and the same book 
may well be used for recording maturities of both discounts and collec- 
tions. 

Having been entered in the register and the tickler, time collections, 
if local, are placed in the files awaiting presentation for payment at 
maturity; and if out-of-town, are sent to correspondents for collection 
if the due date is near, or if the due date is distant are placed in the 
files until near maturity. Demand collections are collected or sent for 
collection at once. 

COLLECTION TICKLER.. 

30 THUESDAT,^....,, _ ......1 90 



o. or DaU 
of Letter 



Payer. 



Where Psjable 



To 'Whom Sent. 



For Whom Collected 



Fig. 206. — Collection Tickler. 



The Superior trust Company 



::m'"' 



§*e«»vwoo*>, Q#i* / yiff^ 3J- 1Q0£ 



We enclosejor collection, and credit, items at stated below s 

ITEMS MARKED X NO PROTEST. DO NOT PROTEST ANY ITEM UNDER TEN DOLLARS. 



N amber. 


DRAWER 


ENDORSER. 


PAYER. 


AMODNT. 


ft H 4 


(IjllL'liLiA*^ 


4b. (P.tioAA. 


/rt-)Lrt. 




fC;G 


iH 


Jf k L cf 


J\. -. . ^fi-& >..<L.-w. 


L }\^ah± <=K/Vure-r- 


,5~^')Uc£, 




HfrS 






/ 


U 




^~ 


Jf STO 


"f^t 































Fig. 207. — Remittance Letter. 



Letters of Remittance, Etc. 

Trust companies in towns where there is no clearing-house of course 
collect their local items by messenger. Their out-of-town items, both 
cash items and collections, are usually collected through their corre- 
spondents in clearing-house cities, but in some cases are sent direct to 
banks located in towns where the items are payable. The letter forms 
used for listing the items are generally in bound book form, the alter- 
nate leaves being perforated so as to be easily torn out. A sheet of car- 
bon paper is inserted under the perforated leaf, so that when it is torn 
out to be sent with the items listed thereon, the next sheet contains a 
copy of the letter. These copies remain bound in the book, and furnish 
a permanent record of remittances, thus serving in place of the old-time 



FORMS FOR BANKING DEPARTMENT. 



255 



remittance register. This plan is an improvement over the old one of 
having all such letters copied in the letter-press. Figure 207 shows a 
form of such a letter. If it is used for cash items, the letter starts with 
the words, "We enclose for collection and credit," as in the figure; if 
for collections, the word "returns" is substituted for the word "credit" 
in this sentence. In all other respects the same form serves for the two 
purposes. Figure 208 shows another form of remittance letter that is 
being used extensively by the smaller companies. The sheet is per- 
forated along the line shown at the right of the figure, and on the re- 
verse side of the portion of the sheet to the right of the perforation, is 
printed a duplicate of the matter shown under the heading "Valley Park 
Trust Company." In listing the items the end of the sheet is folded 
over along the perforation, so that by the use of carbon paper two copies 
are obtained of the matter listed under the last two headings, "On" and 
"Amount." The end of the sheet is then torn off, and serves as the remit- 
tance letter. By this plan a complete description of each item is made 



Remittance Sheet. 



*pr*/. 


NUMBER 


DRAWN BY 


FAVOR OF 


LAST ENDORSER 


to 


?M 




Uf^SKn^aA^r^. 


3.(£/}l4rr£r>v 


CUh "T ^ui4>w 








c'V «■ S^JJL 




etc. 








'IH.-M.^l/W^L 




d'ofrurr^ x't-o. 








(Lt>. 




'L». 








LO\£ki A /T '-Jm.vtvcv; 


<J\ ■ S . ^rr-u/^j 


a.Q.^io^tJi 










u 




i 











Valley Park Trust Company. 

Valley Park, Mo~JJ^~&d~-~190& 

J&U. <£&&*& tiu^zt Q*, t .... 

4p^^M.,M^ 

We enclose for collection und credit. 
Item casrked X no protest. 

RespectfiMy, 
,SAL^.{lhns^C... Treat. 



l/db 



l-tfr 



l<d- 



§k^ 6W-&. 



31 



1SS 



l±o 



JA 



•s-o 



ftL 



I 3 



3^ 



Fig. 208. — Remittance Letter. 

for the records, while on]y the essential part of the matter listed appears 
on the letter sent to the correspondent. This form may be used either 
permanently bound or in loose leaves. 

Figure 209 shows a form used for reporting on and remitting for 
collections. Unpaid items are listed at the bottom, as shown in the fig- 
ure. To each item returned unpaid is attached a slip like that shown in 
Figure 210, giving the reason for non-payment. 

When an item sent for collection is not heard from within a reason- 
able time, an inquiry is mailed to the bank to which such item was sent. 
The form — called a "tracer" — used for this purpose is usually printed 
on a postal card. It is shown in Figure 211. 



Official Checks. 

Checks issued by a bank against itself are known as "cashier's 
checks." Similar checks issued by a trust company are called "official 
checks" or "treasurer's checks," and, sometimes, "cashier's checks." Fig- 



256 



TRUST COMPANIES. 



ure 212 shows a form of such a check. Sometimes the check is signed 
only by an officer, and sometimes it is signed by an officer and counter- 
signed by a teller. Record of the issue of official checks may be kept 
either on the stubs of the check book or on an official check register. The 
latter is of the same form as the draft register shown in Figure 214, ex- 



The €iT^T|p^^f^jg^^ 

LKr, ga thnc *x\ t i9oJ2_ 



POUJLAX, 







M. A. WILLIAMS, CASHIER. 



YOUR NO. 



2JJLSI 



-XQS 



a a l 



■DATE OF LETTER 



2E3 



AT 



LL 



IX 



PAYER 



SX (A 




Ci^^-JL 



(LJL & ^£ 



>&r 



<Jofa&L 



'&- 




AMOUNT 



£I_Q 



:2 



3 



z 



% 



aoeg 



4%, 



tjAo&j 



q 



£D 



LO 



YOUR NO. 


DATE OF LETTER- 


NAME 


AMOUNT 


x/46 


TLnr. 


J£~ 


U) IX^Ou^Mb < ^ A '$ te^Xi, 




/ 





c 




af L a. 


. i\ 


((. 


<L(A (MAjla^j 






7 


^r 


7^ 












































. 




































- 













Fig. 209. — Collection Report and Remittance Letter. 



FORMS FOR BANKING DEPARTMENT. 



257 



cept that the columns for exchange are omitted. The ledger account of 
official checks is kept sometimes on the general and sometimes on the in- 
dividual ledger. Unless an official check register is used, the ledger 
account should give the detail of each check issued. It is also well to 
enter J ;he debits on this account opposite the original credits, as in the 
case of the certilied check ledger account shown in figure 224. 



RETURNED 

UNPAID 

Reason checked, if known. 



Check Sent 
Has Been Paid 
Will Remit 
Will Write 
As Requested 
Refused 
"Payment Stopped 
Never Pays Drafts \X 
j* m w *9* a. /+ Not Correct 

Central trust Co. *° Attention 

For Signature 
For Endorsement 



FROM THE 



Jacksonville, Fla. 



Not Enough Funds 



Fig. 210. — Collection Return Slip. 

THE BLANK TRUST COMPANY 

Buffalo, H . Y. f %*9,Wv-. 
PLEASE REPORT ON THE FOLLOWING COLLECTIONS.:- 



No, 


Payer 


Sent 


Due 


Amount 




2.3 1 iir 


y^w^-^vv. a ^ <J *~ U)ouo^L 


"fyofc 


£fr, 




3 a 1 


tfo 




< 


T^^ 































































Respectfully yours, 

Brown Smith, Treasurer. 
Fig. 211. — Collection Tracer. 



O 

a 



33 




IViAsuReR 



Fig. 212. — Official Check. 



258 



TRUST COMPANIES. 



Drafts on Banks and Trust Companies. 

Like banks, trust companies find it necessary to keep an account with 
some bank, banker or trust company in New York city. The larger com- 
panies usually have several such accounts in New York and also carry 
accounts in Chicago and other large cities. It is also customary to carry 
accounts with one or more local institutions. 

Figure 213 shows a common form of draft against such an account. 
Record of the issue of such drafts is kept in a draft register, a form of 
which is shown in Figure 214. In large institutions a separate register 
is kept for each correspondent, or at least for each of the chief corre- 
spondents. The smaller institutions often use one register only, assign- 

Me r^attfss &aam$*te Intat (Eotnpang 



|JaEiotiiPnrdi*r!if 








Birttflre 






(RjJln^l.d^O^ 



Qtihitt 



Fig. 213. — New York Draft. 



Drafts Drawn o nCKjl Jun^x^UtK Oj^lcy^.C (jh&^'C i c %Ua^^JC. 



1 N FA V O R OF 



Thle^dl^^LrlLite 



AMOUNT 



BY WHOM PURCHASED 



Ik 



2d 



^Ka^W^ 



/.is: 



\Hclaa2a C&nre, 



I 



■iCCM-l^.T T§T-^JLtjL 



£c 



llU.vJ^^ 



^M**n>hS- 



iZi 



■^-■^(-•La^^, (X. . c\f>T?\**A/ 



£S 



U 



ok 



vMi^mA (&nrs'. 



Fig. 214. — Draft Register. 

ing the necessary number of pages for the drafts drawn on each corre- 
spondent. Ledger accounts are of course kept with each bank on which 
drafts are drawn. 

When a customer wishes a draft on New York or other city he makes 
application to the draft teller, sometimes verbally; but many companies, 
especially in the larger cities, require that he present his application in 
writing. Figure 215 gives a form for such an application. 



Certificates of Deposit. 

Trust companiejs are often called upon to issue certificates of 
deposit, which in certain cases are more convenient for the customer 
or the company, or both, than either a savings or a checking account. 



FORMS FOR BANKING DEPARTMENT. 



259 



These certificates usually draw interest, and are not subject to check. 
A common form is shown in Figure 21 6. Interest ceases at maturity, 
and if the owner of the certificate does not wish the money and 
wishes interest to continue, he must get a new certificate. Some com- 
panies issue special certificates of deposit which bear interest under 
certain conditions until paid, much like a savings account. Certificates 



Form No. 176 



The Merchants' Loan & Trust Company. 

Chicago, OIWI BJL^^Z^aA. 



to the order of: 



Draft on 'VUA^JzprK m _ wanted 




COi^^^b <J\ , ShO'hs-KA^K / ;.... 




Purchased by ^X . 'KL hCUTJ&LgnW 




Fig. 215. — Application for Draft. 




m . ~^* «fri . 



% Iitchfield Bank & Trust Co. / 



G'Y*"^-^" 



<&?.£&<«*, SjLjcfcwJn*-. i.-x^ toh 3 'Ps /qiZ 



^)^#ifa^/^ /A^-/ia j?Jl 



f>// ^^^^^^'^^^8^^^^^^^S!^' 



/^»5£poe ; ^ 



miereat V^JTrrj cent, per annum. If te n \Q p mnih.. 
No Interest after maturity 



^ TO chEck.— 



t/Cys C&&*U 



$rrjA/ir'< 



Fig. 216. — Certificate of Deposit. 



are sometimes issued which do not draw interest; and some certificates 
are payable on demand, while others are payable on or after a certain 
date. 

If the number of certificates issued is small, the record of their 
issue is often kept only on the certificate stubs and in the general ledger. 
It is more common, however, to use a certificate of deposit register. A 



260 



TRUST COMPANIES. 



number of forms of this record are in use, varying in the amount of 
detail given. The simplest form contains columns for the number of 
the certificate, date of issue, payee, amount and date of payment. 
Figure 217 shows a longer form in common use. Figure 218 shows a 
form of register designed to keep the detail of the account so that the 
general ledger account need show only the total debits and credits for 
each day. Whatever form of register be used, the date of payment of 
each certificate should be promptly entered in the register. 

Companies which are partial to the card form of records use cards 
for the registering of certificates of deposit and show in the general 

—————— m nm ■ ■line BBBgi^aBMMBMMBMBBBBlMM^^B^MMMMaMBBMMMBHWMPMM^MBWWBWM 

Certificate of Deposit Register. 



DATE 


DEPOSITED BY 


PAYABLE TO TNE OBEE« OP 


< UMBER 


AMOUNT 


TOTAL 


TIME 


INT. 
RATE 


AMOUNT OF 
INTEUCST 


DATE PAID 






Brought Forward, 


"" 
















































00 














































01 














































02 














































03 














































04 














































05 














































06 














































07 














































08 














































09 














































10 














































11 







































Fig. 217. — Certificate of Deposit Register. 





DR 






Certif 


gate of Deposit Register. 








CR. 










J>,*1 '(»»- 


.0. 


*M 0U m 


,«r. 


K.r., X i 


TOWHOH.SSon, 


HO. 


»Moum 


TOTU. 


"Sro 






«o 


--" 


.* 








S«t 


if- 


1034 




too 




/ 


<rr> 




<f 


%?<^. c&(T~l/ 


So 00 




7 SO 










'i/shC 


<£l^n Si.' -4" 1l(a** S*T~~-- 






















JL 

4 


GOiXllCUw J>Cm**ii 


Ot 




roc 












<T ^ / _ x 


















(S^Tr^r^ ^U&UjLt 


02 


1 






7 


7-rr> 






zr 














- 


- 










03 
















\ y 




















04 










































05 










































0« 










































OT 










































08 








































09 


























1 














10 



















Fig. 218. — Certificate of Deposit Rfgister. 

journal or the general ledger, or both, the names and numbers of certifi- 
cates issued and of certificates paid. Figure 219 shows such a card 
record. The interest record is kept on the back of the card, the headings 
of the columns being Number, Date, Amount and To, the latter heading 
referring to the date to which interest is paid. The cards are filed 
alphabetically according to the names of the payees. 



Certified Checks. 

Like banks, trust companies are often called upon to certify the 
checks of depositors, the amount of this work varying with the customs 



FORMS FOR BANKING DEPARTMENT. 



261 



of different communities, and being greater in the large cities. The 
certification is usually done by the paying teller, but is often delegated 
to others. In some companies it is done only by an official, and in some 
cases this duty is performed by the bookkeeper in whose ledger is car- 
ried the account whose check is certified. A rubber stamp is generally 
used for certifying checks, although it is sufficient to write across the 
face of the check the word "certified," followed by the date and the official 



NAME 



[ )Jatfci<r JL o& £n i - 1 v / 



ADDRESS X 1 1 1 


\fCr 


oUL > 


2*\ <^» 


<Q^^y\ 


<~)-^-ds 


-xO . ( 


J , 








Number 


Date Issued 


Tims 


Rate 


Amount 


Date Surrend. 


3/f>s-& 


Oft 


7 


m(p 


If-l^fS , 


U^n 




(p^O 




& 


7 


O (o 


31 6 4 


LAasuI 


1 


M<& 


O 'Vvcxri. 


3t 




(po a 












d 
























i 


































































































































1 














i • ■ 












i 

l . • 


















i! 

ii 


| i 
■i 







Fig. 219. — Card Record of Certificates of Deposit. 












saw? ill 



Fig. 220. — Certified Check. 



signature of the person who certifies. Figure 220 shows a check cer- 
tified by the use of a common form of rubber stamp. Other forms used 
are "Good when property endorsed" and, "Accepted; payable through 
clearing-house;" the latter form recognizing the fact that the certifica- 
tion of the check is equivalent to the acceptance of a draft drawn upon 
the bank by its customer. 

There are two general methods in vogue for keeping account of 
certified checks. One is by the use of a certified check register, a form 



262 TRUST COMPANIES. 

of which is shown in Figure 221. The checks are entered on this reg- 
ister as they are certified, and at the close of the day the bookkeeper 
credits the certified check account with the total amount of checks certi- 
fied during the day, each separate check being charged on the individual 
books against the account on which it is drawn. As his authority for 
such charges to the accounts, the individual bookkeeper receives from 
the teller who certifies a special debit slip such as is shown in Figure 
222. When the checks come in for j:>ayment, they are charged on the 
certified check account, and the date of payment is entered in the last 
column of the register. 

The other method is to dispense with the use of the register, and to 
keep the detail of checks certified in a special ledger account, such as 
that shown in Figure 223, or that in Figure 224. In the account shown 
in Figure 223, both credits and debits are entered in chronological order 
as received by the bookkeeper, and a check mark is made before 
each credit item as its corresponding debit is entered, so that the un- 
checked credits show what certified checks are outstanding at any time. 
In the account shown in Figure 224, the credits are entered in chrono- 
logical order, but the debits are entered opposite the original credit of 
each item, so that the outstanding checks are found by noting what 
credits have no debit entries opposite them. 

Record of Expenses. 

It is important that the expenses of a trust company be not only 
recorded as to the total, which is shown by the general ledger account, 
but that the distribution of the account for different kinds of expense 
be shown. For this purpose an expense voucher record, such as that 
shown in Figure 225, is useful. The left side of the record shows the 
detail of each voucher, while the remaining part shows the distribution 
according to different kinds of expense. In a large company having sev- 
eral departments, the distribution by departments is also shown. It is 
also useful to provide for credits to expense account, which may occur 
through errors, rebates, etc. Figure 226 shows the right page of a form 
used by a large company for these two purposes, Figure 225 being the 
left page of the same form. This record is of course based on the as- 
sumption that the voucher system for expense items is used, this practice 
being a growing one among the best companies. 

Various methods of handling the company's payroll are in use. 
Some companies pay salaries by checks, the endorsements of which pro- 
vide receipts from all employees. This method is open to the objection 
that the salary received by each employee becomes a matter of common 
knowledge, which is often undesirable. The method of paying in cash, 
and taking receipts on a pay-roll book in which the names of employees 
are written in alphabetical order for each pay-roll, is open to the same 
objection, though used by some companies. There are companies which 
do not consider it necessary to take receipts for salaries. The most sat- 



FORMS FOR BANKING DEPARTMENT. 



263 

































I 


DATE 


HUKBEH 


— MAKKB 


TO »E0M PATABLX |. FRBSEHTKD BT 


_ AMOUHT 


DAT TOTAL 


TOE* PAID 


L 


|v- 


s 


ixq 


^a/w^L Ou. 6-vv^ZJ^ 


C^rv.A^'^G,. 1 d>..i. 


/X34 /<? 








5^.* 


ip 






■• 


4 


12.2^ 


OS&XJlk. •( <3^rww 


(It.gCwy' Qaj^dLxtLd. 


*a£rirtn<ujt 
















1 


£ 


36 A 


to.Oj (&G^ 


&~koU\, ~J r\J^u£t~Ql . 


lOaJtU^ 




f^*- 


3<<T 


t 


t 1 X 


<r->, 


^g*' 




























1 


























1 








































: l_ 


■ 










































































































! 










1 


1 




J 














i 













Fig. 221. — Certified Check Register. 



Charge Acc't—^ 




U..S 



SV^-^, 



Certified Cmfck *> „»&, » / £a<pl ; ->CW a ^ ©a- 

DA TF.r> - •S>^h,/< ] Wok n* IZL°f 



f lZ&h* 




Fig. 222. — Debit Slip for Check Certified. 



Vdfc^ 









(°0AilJ;<u 


*L 


q</Lj^ 
















1 •-" 


_ 


- 


* 


«&- 


- 


— 








ClrL 


U 














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264 



TRUST COMPANIES. 



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FORMS FOR BANKING DEPARTMENT. 265 

isfactory method seems to be to pay in cash, and take receipts in an 
ordinary journal-ruled book, in which a separate page is devoted to 
each employee. The book should have an index — preferably a marginal 
index. At the top of each page are written or printed some such words 
as these: — "Received from The Blank Trust Company the amounts set 
opposite my several signatures below, in full payment of my salary to 
the dates shown." On each line is written the date of the pay-day, 
and the amount due the employee to such date. It is a convenience to 
have the pages numbered, and in getting the pay-roll ready for the 
paying teller, the disbursing officer writes on pay-roll envelopes the 
page number and the amount due. After the teller has placed in each 
envelope the amount of cash called for on its face, the disbursing officer 
may, if he chooses, turn to the pages indicated and write on each en- 
velope the name of the person who is to receive it. This method saves 
the trouble of preparing for the teller a list of the amounts of each 
denomination of currency or coin needed for the pay-roll. The dis- 
bursing officer simply hands to the paying teller a voucher for the total 
amount of cash needed, with the envelopes showing the separate 
amounts. 

For customers who wish cash prepared for their pay-rolls, a pay-roll 
slip like that shown in Figure 227 is provided, on which is shown the 
amount of each denomination wanted. 

Records of the Supply Department. 

An important task is that of looking after the supplies of various 
kinds — records, forms, pens, ink, etc. In the large companies a good 
many thousands of dollars are expended for such things each year, and 
a regular department is organized to care for the work. It is necessary 
to have a sufficient supply of each article always on hand, to buy in 
quantities that will insure good rates; and yet to avoid loading the 
expense account for any one year with the cost of supplies for sev- 
eral years ahead. In a small company the problem is comparatively 
simple, and occasional inventories under the direction of a watch- 
ful official are all that is needed. Large companies with several de- 
partments require a careful system. The buying is generally done 
by one of the junior officers, who has charge of the department. Each 
new form as ordered is given a form number, by which it is there- 
after known. When supplies are received from the printer by the sup- 
ply clerk, he makes a record of same on the left side of the card form 
shown in Figure 228. The date of receipt, the party from whom pur- 
chased, the quantity and the price are shown. These cards are filed in 
a case, in which sections are set off by index cards for forms of each 
department and for general forms; and the cards are arranged alpha- 
betically in each section. Supplies are delivered to the various workers 
only on written requisitions; and from these requisitions record of the 

18 



266 



TRUST COMPANIES. 



The Security PAY roll slip 
Trust Co 



DATE- 




n, 



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NAME. 



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CURRENCY 



FIVES 

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COIN 

DOLLARS 



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FORM NoM^dlL 



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TO STOCK 


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Fig. 228. — Record of Supplies. 



FORMS FOR BANKING DEPARTMENT. 267 

withdrawal of supplies is made on the record card, Figure 228, on the 
right side under the heading "From stock." The amount of the supply 
remaining is shown in the "On hand" column. The records thus show 
at all times the amount on hand of any given article. They also furnish 
a basis for estimating the necessary size of orders for the next year. 
Scrap-books are kept in which are pasted two copies of each new form 
as issued. The number 97 after the word "sample" at the top of 
Figure 228 refers to the page in the scrap-book on which samples of 
the form are pasted. 



CHAPTER IX. 

FORMS AND RECORDS FOR THE SAVINGS DEPARTMENT. 

THE savings department has come to be one of the most important 
departments of trust companies, particularly in communities 
where the savings hanks have not had great development, and in 
many cases furnishes the largest part of the business. The records of 
this department are comparatively simple; and since the deposits are not 
as a rule active, a small clerical force can readily handle a large number 
of savings accounts. 

The forms and records used are practically the same as those em- 
ployed by the regular savings banks. For a very full treatment of 
printed savings bank forms, based on samples furnished by savings 
banks from all over the country, the reader is referred to a compilation 
of savings bank forms issued in June, 1906, by the Savings Bank Section 
of The American Bankers' Association. 

Opening an Account. 

When a person wishes to open a savings account, assuming him to 
have been properly identified, the first thing necessary is to have him 
place his signature on the signature card as a means of identification in 
future transactions. Formerly signature books were used, and there are 
a few companies which still use them; but the advantages of cards for 
this purpose are so many that their use is becoming nearly universal. 
A few companies use both the book and the cards, keeping the former 
for permanent record, and using the cards for daily business. Figure 
230 shows a simple form of signature card, whose size is 3x5 inches. 
A more elaborate form is shown in Figure 231. The amount of in- 
formation called for on the card varies greatly, according to the policies 
of the officers and local circumstances. Besides the signature, the items 
always included are the address, the number of the account and the date 
on which the account was opened. Among the other items of informa- 
tion often called for are the following: Both home and business ad- 
dress; occupation; employer's name; age, or date of birth; birthplace; 
married or unmarried; father's name or mother's name, or both, some- 
times the whole name being asked for, and sometimes the first name 
only; husband's or wife's name; maiden name (if a married woman); 
native state; nationality; introduced by; source of account; remarks. 
A few companies require the signature to be witnessed. The majority 
of signature cards contain a simple agreement like that shown in Figure 
230, but a few contain q^ite elaborate contracts to abide by the rules 
and regulations, etc., and a few provide no agreement whatever, assum- 
ing that the opening of the account and the leaving of the signature 

268 



FORMS FOR SAVINGS DEPARTMENT. 



269 



imply such agreement. As to the matter of what is needed on the card 
in the way of information for future identification, it is evident that 
there is considerable difference of opinion. If the account is an active 
one, there can be little question about identification. If, however, the 
account once opened remains dormant for a period of, say, ten years, 
the signature alone will hardly be a satisfactory means of identification, 



I hereby agree to the regulations of 
The Blank Trust Co, governing savings accounts. 



Sign here 



Q ccfcy^xJC \£ie^AM<I?)JiAA/yvLJ 



Address 



IH-3 &a^rrhjjA ^ , 



JAN 9 - 1QQ7 



Fig. 230. — Signature Card. 



I hereby agree to the Rules and 3y-laws of 

TEE BLAUK TRUST COMPAITY governing savings 
accounts • 



*>.w? 



Fame. 



(PntsvUK yj* 



Addreaa / /■f-3 




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ari^Jl^ 



JTationality. 



Mother's maiden name 



Date JAN 9 - 1907 Bemarks 




^Xa^r^dt 



Fig. 231. — Signature Card. 

inasmuch as a person's signature is apt to change materially within a 
few years. In such cases it is undoubtedly of advantage for the com- 
pany to be in possession of information of a private character concern- 
ing which an outsider is not apt to be posted. In taking the signature 
of a woman, the teller should always learn whether the title is Miss or 
Mrs., and note the fact on the card, if the signature itself does not show 
it. 



270 



TRUST COMPANIES. 



The signature cards are filed in the drawers of a cabinet which is 
placed where it will be easy of access by the tellers and the savings book- 
keepers. They may be filed either numerically according to the num- 
bers of the accounts, or alphabetically according to the names of the 
depositors. If filed alphabetically, they serve as an index to accounts 
(which otherwise must be provided in a separate book or set of cards), 
thus saving much time and work. If this plan is adopted, however, great 
care must be. exercised to keep the list always complete, and to remove 
the cards of closed accounts promptly and place them in a separate file. 
It often happens that the required signature cannot be obtained at the 
time the account is opened, and it is therefore necessary, in order to keep 
the card list complete as an index, to have a temporary card to place in 
the files until the regular signature card is completed. Figure 232 
shows such a "dummy signature card." 



PROCURE SIGNATURE OF 



y \CiXl.Al4J^ 




^^Ali,;/, 



ADDRESS- 



3.l' | &M~t ao 1 ^- Saf-. 



REMARKS 



CkxsT. ( Yf^-,nA 



JL, q i^ja^A 




NO. OF BOOK- 



X 



2> r \& 



JAN 9 - 1907 



Fig. 232. — Dummy Signature Card. 



Savings accounts are often opened in the names of two persons, 
either of whom is to be permitted to withdraw the funds. In such cases, 
both signatures must of course appear on the signature card, together 
with the notation that either may draw. This notation is also placed on 
the ledger page and on the pass-book. Joint accounts are also opened 
with the agreement that in case of the death of either of the parties the 
account is to belong to the survivor. 

For the signatures pertaining to such joint accounts, some companies 
use the ordinary signature card and make upon it the necessary nota- 
tion, either with pen or with a rubber stamp, while others provide a 
special card. Some consider that a brief notation answers the purpose, 
forms used being these: "Subject to the order of either and the sur- 
vivor"; "joint account"; "to be drawn by either or the survivor"; "either 



FORMS FOR SAVINGS DEPARTMENT. 271 

may draw"; "balance at death of either to belong to and be paid to the 
survivor." Others deem it better to have on the card a more formal con- 
tract, such as the following: "We, the undersigned, hereby declare that 
we are the joint owners, in joint tenancy, of the money that is now, or 
may hereafter be, deposited in the Blank Trust Company in our joint 
names, as signed hereto, and of any interest that may accrue or be 
credited thereto; and that either of us may draw and receipt for the 
whole or any part thereof, either before or after the death of the other; 
and that at the death of either of us the survivor shall be the absolute 
owner of the balance then due the account, as surviving joint tenant, and 
is hereby authorized to receive the same from said company on his in- 
dividual check or order therefor." An interesting discussion of the 
company's liability in the case of such an account, written by Thomas 
B. Paton, and entitled "Legal Aspects of Payment to Survivor of Joint 
Account," is found in the proceedings of the Savings Bank Section of 
the American Bankers' Association for 1906. 

When an account is opened in the name of a society or corporation, 
the signature card must contain the signatures of the officer or officers 
authorized to draw; and it is necessary also to have a certificate that 
such officers have been given such authority in due form. The custom 
with some companies is to take the signatures on a blank signature card 
which is placed in the regular files, and to have the certificate on a 
separate form, one of which reads as follows: 

"This is to certify that at a meeting of of the 

of held 190 , Mr , whose 

signature appears below, was duly elected of said company, 

and as such is hereby authorized to draw funds from and to give in- 
structions concerning the account of said company with The Blank 
Trust Couipany. This authority to remain in full force until revoked 

by action of the of said company, and written notice thereof 

given. 



Signature of 



This certificate must be made by an official other than the person author- 
ized to withdraw funds." 

Some companies use a special signature card for these accounts, the 
signatures usually appearing on the face, and the certificate on the 
back of the card. 

After an account has been opened, it sometimes happens that the 
owner wishes to give to another person authority to withdraw funds from 
his account for a time, or perhaps to become permanently a joint owner 
of the account. In the former case, an order like that shown in Figure 



272 TRUST COMPANIES. 

233 answers the purpose well. If the account is to be permanently 
changed to a joint account, many companies prefer to close the old ac- 
count and open a new one, in regular form; but some provide forms like 
that in Figure 234, to be signed by the owner of the account authorizing 
the change. 

The Depositor's Pass-Book. 

After having filled out the signature card and deposited his funds., 
the customer is given a pass-book, a common form of the inner pages of 

CERTIFICATE OF AUTHORITY TO MOVE INDIVIDUAL OR PARTNERSHIP FUNDS 

S1)U tl tB OJrrttfg. thit ^^-^HTfiy U^Qj^7\S^^\j^fMT)^. ' ""■ .a AUTHORIZED TO WITHDRAW ALL 

OR ANY PART OF THE FUNDS NOW OR AT ANY TIME STANDING Tn lAAJ-{ ' CRFfKT IN^ AL&^Q-i>~> \<ff&s ACCOUNT 

No — ^H" 5, I ■O ' " HI WITH TtlO Blank TrUSt CO** THIS AUTHORITY TO REMAIN IN FULL FORCE UNTIL WRITTEN 

[C^y^j. 7 ' — 190-X 

i ig. 233. — Certificate of Authority to Draw Funds. 
Real Estate Trust Company author.tv tor joint control 



NOTICE OF REVOCATION IS RECEIVED BY YOU. 



CHICAGO 



Uou are berebg Butbotl3e6 to enter the name of. 



IaUMm-z s^^zi 



3 Cb H-H O ' W1TJ4 YOUR COMPANY, MAKING IT SUBJECT TO ^^r - - f»-v--yyXy 



CONTROL DURING LIFE OF iOTH, AND THE BALANCE TO BELONG TO AND BE PAYABLB TO THE SURVIVOR IN CASE OF DEAT H; RE VOCABLE ONLY BY CON.SHT 

OF BOTH PARTIES, IN WRITING, AND UPON PRESENTATION OF THE PASS BOOK. « 

IN SIGNING ORDERS ON THIS ACCOUNT THE BENEFICIARY /U/t,<L VJQjlXl^C J>, ?^~A. (J\. 

MUST ALWAYS INDICATE THE NUMBER OF THE ACCOUNT (^J 

OR REFER TO THE NAME OF THE PRINCIPAL. ~. . 

J** tor*- (J- U^bcA; 

B 88. 5-11-5. vmnam. -^ 



Fig. 234. — Authority for Joint Control. 

which is shown in Figure 235. Some pass-books have another column 
for the entry of interest; but the more common custom is to use the form 
shown in the figure, and either to enter the interest in red ink or use a 
lubber stamp for the interest entry, as shown in the figure. Where 
interest in credited semi-annually, as is the usual case, different colored 
inks are used in stamping the two interest entries for each year; as for 
example, red ink for the January interest and blue ink for the July 
interest. Some companies pay interest in April and October. The inner 
pages of the pass-book are usually cut off along the line above the 
words "Date," "Withdrawn," etc. in Figure 235, so that the headings 
of the first and last account pages may be seen, at whatever pagt the 
book is opened. The rules and regulations of the company are usually 



FORMS FOR SAVINGS DEPARTMENT. 



273 



printed on the first or last page or the cover, together with such adver- 
tising matter as is deemed best. The depositor's name is often entered 
on the front cover as well as on the inside of the book; but customers 
often dislike this, and some companies therefore omit entering the name 
on the cover. 

Usage differs in the matter of requiring savings depositors to fill out 
deposit slips with their deposits. In some cities all trust companies re- 
quire such deposit slips, one form of which is shown in Figure 236, 
Other forms are like the ordinary commercial deposit slip, with the ad- 



thi8 book mu8t not be allowed to run over two 
year8 without presentation for interest entries. 

The Western Reserve Trust Co. 

IN ACCOUNT WITH 
Subject to the Rales and Regulations of tlie CompaDy. 



No. n^ 




. x, Dat& 
IQa to 


Withdrawn 


Deposited 


Balance 


Date 


Withdrawn 


Deposited 


Balance 




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Fig. 235. — Savings Pass Book. 



dition of the number of the pass-book. In other places the use of deposit 
slips is entirely done away with, the depositor simply handing his deposit 
to the teller, who enters it on his deposit journal and on the pass-book. 

There is also a difference of usage as to withdrawals from savings 
accounts, a few companies requiring from the depositor no receipt other 
than the entry in his pass-book. The usual custom, however, is to require 
the signing of a savings withdrawal slip or receipt, two forms of which 
are shown in Figures 237 and 238. Under either plan the pass-book 
must always be presented when the withdrawal is made. Special forms 
are often provided for cases in which the withdrawal is for the full 



274 



TRUST COMPANIES. 



amount of the account, these forms differing from those shown chiefly 
in the addition of some such words as "in full of account" or "being the 
full amount of deposits and interest on my account." 



Form 2S1 



Pass Book Jfo&A}±H-T\ 

The Merchants' Loan & Trust Co. 

CREDIT SAVINGS ACCOUNT OF 

Chicago, ^.Q^x>J.,...yA...'..J90 




FLACE AMOUNTS TO BEDEPOrsiTED BELOW. ENTER AMOUNT 
OP MONEY AG ONE ITETfir-'AND EACH CHECK SEPARATELY 



Money.. 
Checks 



DOLLARS 



CENTS 



/R<£" 



Fig. 236. — Deposit Slip for Savings Account. 



WITHDRAWAL SLIP 
THE NUMBER IS ON THE COYER OF YOUR BOOK 

WAmc the Amount You Wish to Draw Out in PLAIN FIGURES. 
Dollars Under the Woros "Dollars/' Cents Under the word "Cents " 



Book No 



nns\ 



DOLLARS 



%~^<f 



iit 



BR! NO YOUR 

BOOK. 
WE DECLINE TO 

PAY UNLESS 
YOU DO. 



WRITE HERE THE 
AMOUNT VERY 
PLAINLY IN 
WORDS. 



ALWAYS SIGN AS 
YOU DID AT 
FIRST. 



ST LOUIS, _£ 



G^V^. ^. 



.ieO_Z_ 



RECEIVED OF L J 

COMMONWEALTH TRUST COMPANY 
SAVINGS DEPARTMENT 



4 




~(ThJU 



Signature. 



^ 



t^V^^Q ^ 



, s, 






DOLLARS 



Present A 



d$RES$ 



ENTERED BY- 



SIO. EX. BY 



APPHOVED BY 



Fig. 237. — Savings Withdrawal Slip. 



FORMS FOR SAVINGS DEPARTMENT. 



275 



Savings depositors frequently wish to issue orders or checks against 
their accounts, and this is usually permitted, although care must be exer- 
cised lest the account be used as a regular checking account. The forms 



CLEVELAND, O.. 



SAyraos Vottoher. 



received prom The Reserve Trust Company 




^r 



-190 



1 



• 



30, 




DOLLARS 



AND CHARGE TO MY SAVINGS PASS BOOK No, 



3nrsr4- 



SION HERE . 




O^L 



0&<?*cs 



Fig. 238. — Savings Withdrawal Slip. 



THE GUARDIAN 
TRUST COMPANY 



PS6.J2_ 




EXX TO THE OBDEa OP 



o 



Passbook must 
accompany this check. 



WHICH CHARGE TO SAVINGS AOCOTTKT No. /^/-3/ 



Ka. Olol£ 



Fig. 239. — Check or Order ok Savings Account. 



Notice expires 



:?7 f<?0(> 



Pittsburgh, Pa., TiklAk-VZoL 



I hereby give notice to The Blank Trust Company that 
I will, at my option, at the expiration of <$Q Am 



from this date, draw f/"om said Company $ <£~OQ — 

deposit number 3io / <5 in said Oompany. 

rk 



of my 




Fig. 240. — Notice of Withdrawal. 



used for this purpose are much like an ordinary check, with the addition 
of the pass-book number and a notation that the "pass-book must ac- 
company this order, unless left at the bank." Figure 239 shows such 



276 TRUST COMPANIES. 

an order. Some companies provide a special form of order where the 
withdrawal is for the full amount of the account. It is often required 
that such orders be witnessed. 

The rules of many companies provide that withdrawals from savings 
accounts may not be made except after written notice, which must be 
given a certain time in advance. This time varies from ten to ninety 
days and frequently varies with the amount to be drawn. The notices 
are filed according to their maturities, and the withdrawal must be made 
within a certain period (usually ten days or thirty days) after such 
maturity; or a new notice is required. Figures 240 and 241 show forms 
used in this connection. 

notice left on "book number /^TO for $±miL^ — ■ 

at 

the blasts: savings ato trust company. 

This notice is not negotiable, and must be 
presented "by depositor when withdrawal is made ♦ 



Date of notice Oi>p£, ^S" 1901Q_ 
Payahle Ocf, vS~ 190 la. 



Or within ten days thereafter • 

Fig. 241. — Acknowledgment of Notice or Withdrawal. 

Savings Journal. 

Record of the day's business in savings deposits and withdrawals 
may be kept by the bookkeeper on journals or scratchers similar to those 
used for commercial accounts; as for example that shown in Figure 181. 

It is more common, however, for the tellers to keep journals of 
savings deposits and savings withdrawals, entering a memorandum 
of each transaction as it occurs. Figure 242 shows a form of this 
record for withdrawals. As will be seen, each entry covers the number 
of the account, the name of the depositor, amount of the withdrawal 
(or deposit) and the pass-book balance after the entry of the item, 
together with any memoranda the teller may wish to make. The 
addition of the pass-book balance is a valuable feature, making it pos- 
sible to verify the pass-book balance with that of the ledger without 
taking the time to consult the ledger for each item at the time of the 
transaction. The same result may be accomplished, but not so well, by 
entering the pass-book balance on the deposit slip or the withdrawal slip. 

In case the business is small, only one deposit sheet and one with- 
drawal sheet are used for each day's business, or for several days' busi- 
ness, until the sheet is full. In large companies, however, it is customary 



FORMS FOR SAVINGS DEPARTMENT. 



277 



to use one sheet for the accounts in each of the several ledgers, or each 
division of the cards, if card ledgers are used. This is partly for con- 
venience in posting, and partly in order to keep the total deposits and 
withdrawals for the day in each ledger separate, so that trial balances 
of each ledger may be kept. 

Figure 243 shows another style of savings journal, in which a 
separate column is provided for entry of the items in each ledger or each 
subdivision of the cards. The footings of the several columns show the 
total deposits (or withdrawals, as the case may be) for the day for the 
different ledgers or card subdivisions. 



Savings Withdrawals. 




2j&Po., 



iM 



/ 



eX^KcL/rrL CKa-Hs 



c HUa. 



^ 



o^i/i , lAJk 



3 — 



WITHDRAWN 



is: 



u 



to. 



-Sr- 



•M-V *p-- 



.%. 



dbxtA. 



SJM 



Fig. 242. — Savings Withdrawal Journal. 

















SAVINGS 


'JOURNAL 










JANl 


2 190 






















.... 




M.. 


«• 




„.":.. 


_£. 


„„:;„.. 


»r«- 


«£« 


'£££[{ 


tMMalm 






liTtlhsu*. <3L LOa^l 


■sxn & 
















i r 






































3iiy 








KmXAX* 1 S*,<r-«n^-ir 


3/f 




iT" 














































, 


W 1 


1 • 


<ut- 






(RaU&M£.^(&-c4£ 


IJTX114 














































1 1 « 


so 


_z 


144 


4 T 


sJtl 






QILZa e. <stL.„^ 


4*77 




























*s 
























2-7.5 










fo,w t toki£« u 


1 lUSSS 








































, 












' 


to!' 


„ 






aCL^*Su^JM- 


(.31* 
















' a 




































<?<7 


fd" 








« ti 
























































































































































































































































































































\ 


' 


. 



Fig. 243. — Savings Deposit Journal. 



Figure 241 shows a record of deposits similar to the form shown in 
Figure 242, but with the addition of columns for proof of postings. The 
teller, at the time of the transaction, fills out all the columns to "Pass- 
Book Balance" inclusive. The bookkeeper posts to the ledgers from 
this sheet; and, after making the posting, enters, in the columns shown, 
the old and new balances of each account. In doing this he notes any 
case in which the new balance shown oy the ledger differs from the pass- 
book balance as entered by the teller. In this way differences between 
the two books are immediately detected, and the pass-books are called in 
for rectification. When the posting is completed, the footing of the 
column showing the amounts of deposits is entered in the "Old Balance" 



278 



TRUST COMPANIES. 



column,, and if the postings and extensions are correct, the "Old Balance" 
and "New Balance'' columns should agree in footings. With the with- 
drawal sheet the process is the same, except that the footing of the amount 
column is added to the "New Balance" column. In the systems illus- 
trated in figures 242, 243 and 244, the sheets for deposits and with- 



SAVINGS OIPOSITS. 



JM1219QZ. 



.m.J£££.l To...L&.Q&.a. 



LS-lDJi 



LML^^KJA^A. 



to 



isnc^s 




Ul 



fUH 



4£j 



1£.L1A 



J2.&L 



-LI 



m 



*±3r 



U2 



^R 



4£ 



::■' 



L^fiM 



/jlC 



et-1- 



u? ' 



1£ 



0^1 



3 / 4 S-C 



^r> u k 



ZkifM 



_ifl 



2-^ 



as 



ill 



.. fg^tj, ok 



V- 



: r , -■- 



- -■■--,.- 



JL± <£.,_. V- 



j Q D, 



-^ 



^_ 






L22Q. 



■rf^ 



2.Z1S 



Ld. 



k±. 



lAlui 



-23 



<£ - 'H^f- 



^a 



L£2l 



K'^T-rr^-A *J. (jQ~<^,' 



■Mi 



Ul 



t±M 



(^al<fer 



w 



^s; 



{£2ia 



5&3 



^LtAiE^ 



61, 



Lk 



_s& 



l&4 



-Lv 



S^it 



Li 



LiL 



TRf 






-l£ 



_i^i 



Hi. 



JJL 



LL" 



-/t , 



I2L 



iLi 



/ >0 

|LL3 



.'i ■? ■' 



iiL 



Fig. 244. — Savings Journal, with Proof of Posting. 

drawals are the same in each set, except for the headings "Savings De- 
posits" and "Savings Withdrawals" respectively. At the close of each 
year or each half-year, the sheets should be bound in permanent shape, 
and filed in the vault. 

Savings Ledgers. 

The use of bound books for savings ledgers is fast giving way to the 
use of either loose-leaf ledgers or cards. The disadvantages of bound 
books for this purpose are many. They soon come to contain many 
closed accounts. The space assigned for a given account is apt to be- 
come filled, so that it is necessary to "carry forward" the account to a 
new page, or else to close the account and open a new one with a new 
number — a troublesome process both for the company and for the de- 
positor. Where bound books are used, provision is usually made on each 
page for more than one account, the number varying from two to eight. 
The ruling does not differ materially from that used in the loose-leaf 
and card ledgers here shown. 

Figure 245 shows the form of loose-leaf savings ledger that is most 
commonly used. Its size, including binding space, is lS^x^/i inches. 



FORMS FOR SAVINGS DEPARTMENT. 



279 



Some companies prefer to have the balance column placed between 
the debit and credit columns. Whichever plan is adopted, there is a 
distinct advantage in having the rulings of the pass-books and of the 
ledgers exactly the same. It is sometimes considered a convenience to 
provide a separate column for interest entries, as in the form shown in 
Figure 246. A few companies figure interest on each transaction rather 
than on the balances, crediting interest to the end of the interest period 
for each deposit, and charging interest similarly for each withdrawal. In 
such cases the ledgers are ruled to provide for these interest computa- 



Sheet No 



Account No. 




Fig. 245. — Ledger for Savings Account. 



2f<d& 







)*Qwji&~ ^K. 


O^-u-oc/* 


.n 








IK. 








y 1 












,„ DATE 


WITHDRAWAL 


DEPOSITS 


BALANCES 


INTEREST 


MEMORANDA 






2j 










loo 






I OQ 










_l 




1 










I CO 






3 o n 












'W, 


( 
















ko$ 


f** 


-3 


fZ 




1 


■J 1 

















































































































































































































































































Fig. 246. — Savings Ledger., with Interest Column. 



tions, the headings of the columns being Date, Interest Balance, In- 
terest Dr., Withdrawals, Interest Cr., Deposits, Balance. The interest 
balance is kept separate until the end of the period, when it is added to 
the balance of the account. Some companies have adopted the practice 
of taking the depositor's signature on the ledger leaf, which also con- 
tains other descriptive matter usually found on the signature card. 
Figure 247 shows a ledger leaf prepared for this purpose. 

Card ledgers for savings accounts are extensively used, especially 
among the larger companies, the form of the card ruling having the same 



280 



TRUST COMPANIES. 



variety as in the case of loose-leaf ledgers. The most common form is 
shown in Figure 248. The tab at the top of the card shows the last 
figure of the account number, the position of the. tab varying with the 
figure, that for 1 being at the extreme left, as shown in the figure, and 



In account with 
Sheet Wn-r I 



THE BLAHK SAVINGS AHD THUST CO^AHT 




Book Ho.cfy^f 



I herefcy agree to the Bylaws, Rules and Regulations of this lank 



Sign here_ 



Address. 



"XnSA- ^aJ*Gu>oHW>rA QjA/ 



aaaJ£4> 



Birthplace. 



^01. 



Oooupfttion (XXXcrYVJLAc^ Out ¥& aa.^ Mother's maiden name 



Age 2£ - 



=5= 




Withdrawn 



Deposited ii Balance Bate 



Withdrawn Deposited 



Balanoe 



2A3. 



/ &-Q 



km 13 ^ f 



^4 



Am 



2J> 



ltf-±L 



&M 



Fig. 247. — Savings Ledger, with Depositor's Signature. 

those for 2, 3, etc., being at measured distances to the right. These tabs 
are for convenience in picking out the card wanted. The cards are 
arranged in numerical order, with large index cards for each even hun- 



PakJLA^ 



L=A 




. O^i ^LaWx^, 



24471 



DATE 



WITHDRAWN 



DEPOSITED 



BALANCE 




3 



'oiz 



loo 



/ (DO 



.j-U^g , 



£L 



^O 



/ vS"Q 



r 



Zoo 



3^<D 



M 



Z_2_^I 



2. ^ ^ ' 



iuty 



1st 



06 



aiaci 



X 



ass 



2-z n 



^- 



.v-g/ffd^- 









(Ufl 



3 4 6 



3 <? 6 



3^ 



3 q 



ten. 



xo 



X o 



1st 



'07 



nterest 



1 



3 q (a 



^Jk 



..Z2* 



JJL 



H-o 



S.ASL 



oj_ 



Fig. 248. — Savings Ledger in Card Form. 



FORMS FOR SAVINGS DEPARTMENT. 



281 



dred numbers, and smaller index cards for each even ten numbers. For 
example, the card shown in the figure would follow the index card 
marked 70, which would appear in its proper order between the large 
index cards 24,400 and 24,500. The cards are kept sometimes in the 
drawers of a cabinet, and sometimes in the drawers of a specially-pre- 
pared table whose top is made in movable sections, enabling the book- 
keeper to place a section just at the side of the card-drawer on which 
he wishes to work. During the process of posting each card as wanted 
is removed from the file, the entries and extension are made, and the card 
is then returned to its place. A proof of posting may be taken in the 
same manner as that described in connection with Figure 244. A method 
used for proving the postings on the adding machine is as follows. 

SAVINGS LEDGER TRIAL BALANCE 

Dft TE JAN 19 1907 



REMARKS 



' f&£0 



1<{£3 



LI 



Ml 



imbk 



2*. 



3 s~jf4 & 



W° 



life 



■s&oqo 



Lqc 



tesSS'&y'lf- 



±L 



Z'JM 



IS 



& qc& 



lA 



zm<\<o 



^ 



& 



Qoc. 



2,yj 



<o± 



Mn 



fcTcsr? 



H1M20 



32)fr<?^ 



mlako 



Q± 



<s 'Kou m 



fcfefe 



Ik 



<f£3nn 






8 



432. 



(>><£> fc 



1Q 



± 



IM^'. 



mif &ik 



SX- 



'JD 



2lfo \& 



I Go 



a 



/ / 1 8 mo 



1Z 



JJL 



M£> 



lak 



55T 



£l&(pi& 



It 



12. 



ItOS'tf. 



£*m 



Z$S'Gl£, 



U 



12l 



i>\& 



SMBQ 



lOkSSD 



o±_ 



Qo£i 



A3 



l£4 



2l±2. 



£22 



lit 



Fig. 249. — Ledger Trial-Balance Page. 

Using the journal as a guide, the cards of the accounts active for the 
day are removed from the files, temporary cards (of different colors for 
accounts having credits and accounts having debits) being put in their 
places. After all the cards are removed the balances shown on them are 
listed on the adding machine. The postings are then made, and a new 
adding-machine list of balances is taken. To the latter list is added the 
total of the withdrawals for the day, and to the former list the total of 
the deposits; whereupon the totals will agree if the work has been done 
correctly. All of the accounts active for the day may be included in 
one such proof, or a separate proof may be taken for, say, each five 
thousand accounts. This will be determined by the method used in the 
monthly trial balances, which are often taken for each five or ten thou- 
sand accounts separately. The object in so doing is to lessen the ground 



19 



282 TRUST COMPANIES. 

that must be covered in searching for an error, search being necessary 
only for that group of cards which does not balance. For similar reasons, 
as already noted, companies which have a number of loose-leaf ledgers 
keep record of the balance of each ledger separately. This may be done 
by running in the general ledger a separate account for each of the sav- 
ings ledgers. A better plan, however, is to keep a daily trial balance of 



V^'^'v^W Vs^xc^Cn* 



• a S. i r 



NEW ORIiBAKS. jrA/W •■ O 19.0_J_ 

Pass Book No.-SX rf~ ^> [ is retMned 5 Days for the 

computation of interest. 

Please present this ticket for the return of same. 

Fig. 250. — Receipt for Savings Book. 

affidavit to loss of pass book. 

SQlalC Ol VSJDlO, J. M< Before me a Notary Public, in and for said County, personally 

CUYAHOOA COUNTY. J 




who beikg-first duly sworn says thaL.<bJ^.Jis the owner of a certain savings account with ttbe Cleveland 

Ztmt Compan?, of Cleveland, Ohio, evidenced by PASS BOOK Na. JZ3&SL. , issued by the said 

company, and is the person named in said pass book; that there is now due.jy^^x^L.ort said pass book 

the sum o/i2oM^.:zLy<cr>«^^ 

that the said pass book has been hst, mislaid, stolen or destroyed; and that the said account has not 

been sold, assigned or pledged to any person whatsoever. 

.^k^o^..^^IlA^„.... 

.' -CJ i A — 

SWORN TO before me and in my presence subscribed this .....A^^J^K^....^^z^^r...„:^: — day 

0f^j£L^^^j^ 1 -/-. ^ASh^rr^. Sotary Public. 

received of (tbe Cleveland Sruet Company this...L^L^EZday of^p^^^s^. 190.^.. 

Ckb&zLilccJk^^ J 

Being the balance due, with interest in full* on the above named savings account, in consideration whereof 
I hereby agree to fully indemnify the said Trust Company against any loss growing out of or in tiny way 
arising from the payment to me of the above sum without presentation of the pass book evidencing said 
account or by reason of any transfer or assignment of the said account -or any interest therein. 

^ _ 

Fig. 251. — Form Used When Pass Book is Lost. 

the savings ledgers in some such form as that shown in Figure 249. Each 
day the total debits and the total credits for each ledger, as shown by 
the savings journals, are entered in the columns shown, and the balance 
for each ledger is extended. The total of the balances for the several 
ledgers should equal the total savings deposits, as shown by the general 
ledger. This form may easily be arranged on the plan of the Boston 
ledger if desired. 



FORMS FOR SAVINGS DEPARTMENT. 283 

At interest-paying periods, pass-books are brought in for the entry 
of interest. Occasionally the interest is entered while the depositor waits, 
but it is more common to retain the pass-book for five or ten days, giving 
the owner a card receipt, such as is shown in Figure 250. 

It is not an unusual thing for a depositor to lose his pass-book, and 
demand payment of the account without presentation of the pass-book. 
In such cases it is wise to insist upon a thorough search for the book, as 
it very often happens that it has simply been mislaid, and the depositor 
finds it when he is made to understand the importance of doing so. If 
the book cannot be found, the depositor is required to sign an affidavit 
and receipt, such as that shown in Figure 251, and the account is closed. 



CHAPTER. X. 

FORMS AND RECORDS FOR THE REAL ESTATE DEPART- 
MENT. 

THE Real Estate Department of a trust company undertakes the 
care, sale, purchase and rental of real estate. Services of this 
character are often included in the administering of trusts held in 
the estates division of the trust department — or the individual trust de- 
partment, as it is sometimes called; and the principal forms needed for 
the purpose have been shown under the heading "Forms and Records for 
the Trust Department." 

In addition to this real estate business incidental to the administra- 
tion of their trusts, trust companies often conduct business as regular 
real estate agents. If the amount of such business is not large, it is 
usually carried on by the estates division of the trust department. In 
some localities, however — notably in St. Louis — trust companies are 
numbered among the leading real estate dealers and agents, and 
maintain separate and well-equipped departments for the work. Real 
estate held by estates in the trust department is turned over to this de- 
partment for management, the trust department becoming a customer of 
the real estate department as to such property. In such case the fees 
of this department are a charge against the earnings of the trust de- 
partment, the charge against the trust estate being the same as if one 
department handled all the business. 

The relation is close also between this department and the loan de- 
partment so far as concerns real estate mortgage loans, and some com- 
panies handle all such loans through this department. The forms needed 
for this purpose have been given in Figures 177-193. 

In the present chapter will be considered the forms needed for a real 
estate agency business as distinguished from real estate business con- 
nected with the administration of trusts. 



Un Gonslfceratton of the Mississippi Vaixey Trust 
Company listing and advertising the within described property, I 

hereby authorize it to sell said property for _ , — 



tnonze it to sell said p 



.Dollars, 

as^hgree to pay said Mississippi Valley Trust Company the regular 
commission established by the St. Louis Real Estate Exchange, 214 % 
on City property, or S % on County property, upon the sale of said 
property at this price, or any other price -which I may accept. 

This Contract may be revoked anytime after 

...y^S^xJLu.J.^...., , _.190. / 7 , by my giving 30 days' notice in 

writing to said Mississippi Valley Trust Company.,- 




Fig. 252. — Sale Agency Coxtract. 



284 



FORMS FOR REAL ESTATE DEPARTMENT. 285 

The department is of course equipped with maps and charts covering 
the territory in which it operates, files containing memoranda regarding 
values in different localities, indexes of various kinds described on another 
page, "For Sale" and "For Rent" signs, files for the keeping of keys, 
and other necessaries usually included in the equipment of a real estate 
office. The work is of two somewhat different kinds, the selling arid the 
renting of real estate; and the department is sometimes conducted in two 
divisions. 

Use This Blank in Listing Property 
FOR SALE. 

/. St. Loujp, Mo. t . .. J»LV>K* /a£> 1QO,!/ 

Owner's Name -^^.^3^S^pi..^.x.Sc>K^T>£^^A^U/- _- - 

Address l£M>±f..... ^mMls jS£_* _ 



DESCRIPTION. 

Street and Number ^jA^lL-^Si£^J^L: .,.-_ 

City Block No L^L,. __ ^ Lot No,...§„7 

SheotI*t--M:Q-..-.K--.J-&Q....-^££±* _ » „ 

Electric Light k^.. . ., 

Street Graded _.,..<£_ „ ~ . . f 

•' PavetLwith ...iBfy^C , . f „ 

Sidewalk L^VvwfcrrvXTl r / 

Bldg. Restrictions..._.VfeT><^^....35 



IMPROVEMENTS. 



Built of ^Tvd^^rf.. _ 

Roof ^L&J^I-.... ...-■...■ 

Number Stories ^_f^.9Ei.v. 

" Rooms -Zf. . , „,_ _ „._ 

Occupied as ./I * 4 

Interior Finish..:^c*r^^JU>r0^r^./?r^^5r 

Baths /, Toilet 

Reception Hall JXL^^ , 

Cemented Cellar..... 1 ^..- ... 

How Heated .....V?ttdt....W*sCfe<l~-. 

Condition of Bldg._^3r^A 

Dimensions oIBldg. .Z.&1...X :?.<? . 

Date Building erected ..L&.$..&. 



Outhouses - Built of 

Stable _,. .-_,. Built of .- _ ..- „ 

Lawn, Shade Trees and Shrubbery W.*J^J%^J(&AiXte^..-£./^^ 

Do You WUh SALE BOARD Put Up?.._QL2.«. __ _ 



<^ a^ °2~ i Ib, p- t^tQ&SL - -- 

Price, lafcifcU-x . ■ { . _ A ->.»« 

{ Ground. $XQ=@&~..- 



Tenns...^..Ca^^..y4t^...k^3j<|^. 

Annual Rental, &2*.Q.Zr.. - -~< • 

Mortgage, J.„"rrr^. ? v_ ........... Rate.„---— - -. Expire*...*. 

. J«es, $.v:/«.~ . ^...Insurance_-!S3SjQ.i~ ; Premium,' $3£Z~.. 



ADDITIONAL BLANKS WILL BE FURNISHED ON APPLICATION. 

Fig. 253. — Description or Property Listed for Sale. 



286 TRUST COMPANIES. 

When property is listed for sale, the owner signs a contract appoint- 
ing the company as his agent for the sale. Figure 252 shows a form of 
this contract, on the back of which, shown in Figure 253, is given the 
description of the property. 

Contact No. *M* - - vf^V- '*" -»4- 



Street 




Cily Block No. q Lot No. (e >f 

Size of Lot >3>S" x /nS">S~ 

City Wate#j^~ 



Gas \S* 



Electric Light y. Sewer ^ 



Street Graded V Paved with (Qy-Ccfc 



walks ( ge^^vO fc , AM ? y_OCo_ 

Grade 2 J4. 



Building Restrictions \Hp-x ^sl </s4 } ^°ff^' f rZ> ^ A - G^rv&t 



Mortgage, $ ^frOO"?- Rate lo % Expi.es Jjk^-r^ /', /<fO & 

Ta.es. $^~3*2 , 



Price, S'JfrO-o'r Per Foot. $±0? 

Terms \J^ XJ JurUry^ f _9^aX^_ 3 Wri , 



Remarks 



Authority 



O^er (LdtLu.r &ZStt~ , >v Board 

Address n$QS ^CU Awn ^t &*V \_ J) Received by 



Fig. 25A. — Card Index of Properties. 



Location 




UNIMPROVED BUSINESS PROPERTY 


JOO&O™ 


Block No. 


\L 






G 


Lot fv 


IO. o£ 








Description 


uo 


X 


/£"0 w// 


f ^vvCCc\ 


/OuULt 


*t 


^L/^juct 


/ZIO 


/ ° 


■i 




JlIU 




/*■*&*■. 




J 


> 




Ij 


































Owner Vl^I vi!^ ^. ^AxC ^QaJLJZ^ 


Date. 


SfO^w- 


/# 


lOo'/ 


a- 


< 


a 




1 , 



UMASY BURtM) CHICAGO 608»1 F 

Fig. 255. — Card Index of Properties. 



An index is kept of all properties listed, and cards are found most 
convenient for such an index. The size of the cards is 6 by 4 inches. 
They are filed alphabetically by names of streets; or if out of the city, 
by names of towns, townships, etc. Each card contains particulars re- 



FORMS FOR REAL ESTATE DEPARTMENT. 



287 



garding the property listed on it, so that it is not necessary to look up 
other records to give an enquirer such information as he may wish before 
viewing the property. Figure 254 shows a card used for this index. An- 
other form is shown in Figure 255. The latter is one of a set of several 
cards differing in color, the idea being to use a card of a special color for 



Leasf no, 



zq8 



TERMS 



s 



>£. 



DATE OF LEASE 



3 / 



rx 



X 



Occupation 



Cf-jU^y^Jr^r 



PREMISES 



2 



Mame qf tenant,. 



XO^, 



<£.«S 



Business addre 



3ni^ L)<udc &tr 



LOCATION 




RENT BEGINS 



z 



IJ3. 



AMOUNT 




•Sir. 



payable 



Owner 



I l£T i9o£> $^c^r~' 



%rtit 



^>v CxJ^if€^T^JcJU^' 



REMARKS 




VJOlXJC^wAJ 



FORM RE 1 



COMMONWEALTH 
REAL ESTATE DEPT 



TRUST COMPANY 

ST. LOUIS. MO. UMUJtV tUMAU. OMtOAOO 676(1 



Fig. 256. — Index of Tenants. 



^KlaA- j - ^V y O C^w&XUm./ 



Wit 



m_S 



QsY^LtrsAJ 



^L& 



Owner's Name. 



CUvL^c % iOcdJ^^b 



Location of Property. 



AS 




w\ ^dt. 



Water Rent paid by. 



^tova^it" 



Insurance placed by. 



Ou 



on^_^xr 



TENANTS 



37/f 



Phone 



Jj2>7^4- 



Fig. 257. — Index of Tenants. 



each kind of property listed. The card shown is for "unimproved business 
property:" others are for "improved business property," "dwellings," 
"fiats and apartments," "suburban and acreage." Cards may also be dis- 
tinguished from each other conveniently by having tabs at the tops, a 
certain tab being left on all cards used for listing a given kind of 
property. 



288 



TRUST COMPANIES. 



OWNER'S INDEX CARD. 



Namti 



r\ a uwntns eraucA vnr 



Address 


/ x^ ^CJcIMx^^aq, CUsk, 




NUMBER 


STREET 


KIND 


PRICE 


/£*71 


XX) Cx^JAX^^ qX^, 


A)\.rdJ^\cy / 


4 

3 0-0-0. 


Hrk\ 


~dk r\ 


&«br~in£jiLMj«Jk: 


/^oo-O, 


Z£M-3 


U&YV~y^-XL0~r^ 


^W\XJ^^r^CL^ 


&<£tx>. 


39CVO 


(Xr4Cdl~ &M^. 


do O 


7^o 0. 






























































imu>iw mmm. CHioaaoeifi 1 ■ 





Fig. 258. — Index of Owners. 



Name. 




32^ 



<rv 



Mn. / 3 7 ^ 



ArtWri..w' V ^ / 3.3"] Cmirxvr^, 



Date. 



Source of. Inquiry , Vs^-M^ 



fr 



/*T )qp f\ 



Taken I 
-Care of /. 



Nature 



Of fnru.iry VjO^Jji O- (kw^W^Q <&>-<r*L ^^JLJ^CS&r fahZhd. ) oCJ CiS^Jr $000 



DATE! 



%o. 



MEMORANDUM 



cut" * 16.1.4- (KxJLAt&>^ Cu/v, cn^JLn (f^-^-t ~r~yoJi.. Su, o. 



«2 



Fig. 259. — Index of Inquirers. 



FORMS FOR REAL ESTATE DEPARTMENT. 289 

Figures 256 and 257 show two different forms of cards used for an 
index of tenants. The sizes of the cards are 3 by 5 and 4 by 6 inches, 
respectively. They are filed alphabetically. 

OFFICE OF 

MISSISSIPPI VALLEY TRUST COMPANY. 

REAL ESTATE DEPARTMENT. 

St. Louis, Mo., ^Jjfck2^...._ J£. „.„.. 190-7 

Received of LJaMaj^ ^hA . ^oi4v/ 

. of ...w. .s«^ft.. 



DOLLARS, 
as earnest money on r>uxetiase of a certain parcel of improved property lying in City Block No .Q. _..-. .....of the 



City of St. Louis, having a front of efcO. - -,.- ...feet on the *^TT^^r^......._ side of 

Q...I^OhM£^kOO>/^.. _.- _- Street, and a depth...§?M^L.wardly of..J,.£&l feet, 



described as follows, viz.: _ 



The above described property is this day sold by the undersigned agent, but subject to the approval of the owner thereof, to said 

LJ.CLLLCK£L uA ,...\M..CkSteM&X\/. i^^rr^rrr^rrrrrrrr-^rrrZ^ the total sura of 

h - -f-V j 

u!AA£x* fc?^E3*«^GxJfc&^...^rzz^^ payable 

^^^^J^.....^ ^r^zrrr^rr^^rz^r^r-y-^^ Dollars 

in cash, of which the above mentioned earnest money shall^be taken as a part, and the remainder of 
on or before . ]5r.G^?.V..: /.V. r ...J. ..di..Q . / .T^TT - "! ^T -- T"r~: 7~Z~^7 with interest at..>^4_X^ percent per annum 



from C/S-«S*ftsSf- _7T ~^^\^r^ZZ7^^Z.. ....payable semi-annually, said deferred payments to be 

secured by first purchase money Deed of Trust on the above mentioned property. 

Said property will be conveyed by Geueral Warranty Deed free from liens and incumbrances, except as to general and 

sprinkling taxes for the year /.r/.Q..Ci?.._ and subsequent years and all special 

taxes levied or assessed during the year ..../ zf.Q. ../ ~— ~: — which the purchaser assumes and agrees to pay; subject also to 

existing leases now on said property, expiring.. ..j^^XjLtUst '..;..../.... 1..L2.Q ... _ _ „. 



which tue purchaser accept*, nubjiet aloo to Deed of Trust now on oaid pr e mioe s tor 
— r^— — — due 



which the purchaser assumes and agrees to pay; subject also to restrictions now on said property, or such as may be imposed 
thereon by the grantor 

The said purchaser is accorded A^">%^ days' time from this date in which to have the title investigated and to 

close the sale at the office of the Mississippi Valley Trust Company. 

If, upon examination, the title proves to be defective, and cannot be made good within a reasonable time, the sale shall be 
off and the earnest money returned, if the purchaser so elects, but otherwise the sale shall stand good and be binding upou pur- 
chaser nnd owner; should title prove to be defective and cannot be made good, as aforesaid, the cost of certificate of title not to 

n 

exceed V.^rs. ~"^ - — ' -^^~r-r~>r-^Z^r^~r^rT. : — : : ^~..... Dollars, will be refunded to said purchaser 

Rents, Insurance, Interest ou Deed of Trust and Taxes on said property to be prorated to date of closing this sale. Upoa 

the completion of this sale a commission of 1%% is to be paid to the Mississippi Valley Trust Company by the vendor. 

Time is declared to be the essence of this contract, and if sale is not closed promptly as above provided, then, withou. any 

notice whatever, at option of owner of said property, said earnest money hereby jeceipted for shall be forfeited to said owner as 

liquidated damages, and Said purchaser shall be taken to have waived all right, interest or equity under this contract and in said 

property, as though this contract had not been made 

SIGNED IN DUPLICATE. . _ 

Accepted under above terms and conditions. MISSISSIPPI VALLEY TRUST COMPANY, Agent. 

iOcJLlxM.f /! -L- \Mg*^a&y^s 

Purchaser. H'eal Eslclt Ojfitc-r 

This receipt to be returned to MISSISSIPPI VALLEY TRUST CO., on closing of purchase. 

Fig. 260. — Memorandum of Sale. 



290 TRUST COMPANIES. 

Figure 258 represents a card 4 by 6 inches in size used for an index 
of owners of property. 

A loose-leaf form for a list of inquirers after property is given in 
Figure 259. 

Many companies issue booklets giving a list of the properties which 
they offer for sale, describing each property briefly and stating the 
price asked. 

> • ■ ^3 /A La. Cm ■ B n 

Property ' ^ /f 7 .^W^'W-r (M% , 

Purchaser Q\ . -'\. V'. r-^/i* \S-U 

Ov>ner Cl^-^t-iL '^ A-<J\SVkA I 



Sold for S */-6- 0- Q r~ 



Earnest Money Paid. $ / Q-Oc~~ 



Balance Cash Payment. s2^f ^. 
Deed of Trust. S 2, / &£) ~ 



Date of Sale /l£u b< CA. ^S"j l ^ O^J 

Date of Closing /tA-^WC^L I I , H] p' \ 
Taxes 190 6_ Paid by <J£ jHLe^~ 



Deed to ^ ^GlAA-f r U . ^A^gL-ColX' 



«.c£0*r 



Husband <n^-Um*c K . -"V ■ '-^/'rO^^A.^L 

Commission :sJ3l— _%• or S / Ao .-* 

Asst. Agent A L^ yo?,., ; 

Pay Asst. vgent %, or $ 

Salesman £X . ^ . ^tC-/fr £ " 

Salesman will make out sales slip Immediately upon 
effecting sale and hand to Real Estate Officer. 

Conveyance Clerk will Verify and "OK" immediately 
upon closing sale and hand to Chief Clerk who will settle 
with the Assisting Agent and give Salesman proper credit. 

Fig. 261. — Report of Sale. 

When a customer decides upon the purchase of a property, he pays 
down a small amount as "earnest money," and is given a receipt or 
memorandum of sale in such a form as that shown in Figure 260. This 
is written and signed in duplicate, the company retaining a copy. Upon 
completion of the sale, if by payment in full, the company delivers to 
the purchaser the former owner's warranty deed; if by partial payment, 
the purchaser delivers his note or notes for the balance of the purchase 
price, together with a mortgage securing same, and receives the warranty 
deed. In either case an abstract, certificate of title or policy of title 
insurance is also furnished. Sales are also made under land contract. 



FORMS FOR REM, ESTATE DEPARTMENT. 291 

The employee making a sale fills out and hands to the real estate 
officer, together with the cash received, a report of such sale on a form 
like that shown in Figure 26 1. 





St Louis, J$Osy±j^ /<S* _190 



n 



Kindly allow bearer to inspect premises occupied by you, and 
by so doing oblige, Very truly yours, 

MISSISSIPPI VALLEY TRUST CO., 

Fig. 262. — Permission to Inspect Property. 

When the company's agent does not accompany the inquirer to the 
property which he wishes to inspect, it is convenient to use a card like 
that represented in Figure 262, addressed to the occupant of the prop- 
erty, or to the party who is locally in charge. 

n (i ^/* £W TENANT - XT*" ISL 19(l/- 

PropefyJLnted CJ^l^ tJo^W &, , , 

Owner of Pmpert y nAAA . iPXauAjyrTy^ v-e^y i Lease 

Former Location ^^ ( From l \i^[o r } tn 'll^j o^f 

Business AHdrpss 3>S">f <ft*-LrzL &fS 

Collect Rent at d=2 ■ 

Rent, $.3iL2L___per Month . 

Rent Begins Y^/of Paid $ 3<S~?- 

Fig. 263. — Memorandum of New Tenant. 



REMOVAL. — ^yv>v/, "^ 190 



Property >S~xf £ ( ~-^<xj^xr-OLAj v£e 



Owner (jQixyxA- tK , JH CD ^jlAj 



Moved to (~J $~<rr\jrx , , 



Rent per Month <* : ^ ,~ 



Amount delinquent, S °?^"~ 



Fig. 264. — Removal Memorandum. 



292 



TRUST COMPANIES. 



Property may be rented from month to month without a formal writ- 
ten agreement, or for a specified term under a written lease. Forms of 
leases vary according to the conditions. 

The employee who rents a property hands in for the use of the book- 
keeper a memorandum like that in Figure 263. In case of a removal, he 
uses the form shown in Figure 264. 

Ordinary blank forms answer the purpose for receipts for rent, but 
it is more convenient to have a special form such as that shown with 




Call a( 
Bouse. 


•. Will call 
atofflct. 






Paid 


Paid 



The law require* monthly tenants to give o 



onotiot in writing beferercni day c 






SI 5 

Hon 



Rwelwd of- 



St Lows^ L ygft£--_J ^T. „ ,n-,...19Q6 

_3 

vCkC5o?^._....:=rC^ $3jJ^. 

Rent of ^TV ff-^iXLe^ Nn.3lifJ Oia^y^AxJix. <£££, _ 

For_JLb<>! Month . Ending D/^!^ry^L>..31 rrr-p.JW06 

••*«o „ . Mississippi Valley Trust Company. 



>S~- 



-- 1906. 



ESTATE DEPARTMENT 



Requests roc repairs should be made in whiting. 



Fig. 265. — -Receipt for Rent. 



The law requires monthly tenants to Rive one month's notice In writing before rent day on vacating premises. 



/I 



^y TW-Sent of the Premises . 3JJLJL .V^r7>^A*^,... ^t ,. 

for the month ending L^^^^.-?J..^JS.0h. _.. 

vill be due '^A&sX^As L r .J..3Q....(o. _ 



at 



REAL ESTATE DEPARTMENT 

Mississippi Valley Trust Company 

N. W. COR. 4TH AND PlNE STREETS. ST. LOUIS. 



Please remit the amount, $ -^.^..%. 



■promptly on that date, 



REQUESTS FOR REPAIRS, SHOULD BE MADE IN WRITING. 

Fig. 266. — Rent Notice. 



stub in Figure 265. Whenever possible, it is well to get the tenant into 
the habit of calling at the company's office to pay his rent. Many ten- 
ants are willing to do this regularly; thus saving the company the trouble 
and expense of a special trip for collection, besides bringing them in 
closer touch with the company, so that they are apt to become customers 
of the other departments. If it is necessary to send notices of rent due. 
a form like that shown in Figure 266 is mailed several days before the 
rent is due. When the rent is delinquent, a notice like that in Figure 
267 will often obviate the necessity of legal action. 



FORMS FOR REAL ESTATE DEPARTMENT. 



293 



THE GUARDIAN' SAVINGS & TRUST CO., 

REAL ESTATE DEPARTMENT. 



ML 




£S±. 



CW\x>L/£^l 



CLEVELAND, O.,.- 



<r hLLsr<d. /3 .^ 07 



an 




4fr, 



PLEASE -TAKE NOTICE THATNuXS MUST PAY YOUR DELINQUENT RENT AT THIS OFFICE OR 



SURRENDER POSSESSION OF PREMISES Al 



.IMMEDIATELY. 



YOUR NON-COMPLIANCE HEREWITH WILL NECESSITATE OUR BRINGING ACTION TO SECURE 

POSSESSION. 

TH|E GUARDTAN SAVINGS & TRUST CO. 

I 1000 2-06. BY /^-A"' 



No.___9Q£. 



Fig. 267. — Notice of Delinquent Rent. 

THIS REQUISITION MUST BE ATTACHED TO BTT.I... 

■> l » »»■ » tm > — 

St. Louis, Mo. 



MISSISSIPPI VALLEY TRUST ( C 

REAL. ESTATE DEPARTMENT, 

TO (Svo-ix^y a ^- Q>, 




J*5~ 190. 



T 



Please M<™- IS~ < bk <^^Aj^J^<^d^ ^U^ ejX^ 
* 10 die < J W>^ St: . . . 



APPROVED: 



45 



—and charge to account oi 



MISSKSIFPI VALLEY TRUST CO. 



Real Estate Department. 

Fig. 268. — Requisition for Supplies or Repairs. 



if 





COMMONWEALTH TRUST COMPANY. ST. LOUIS 
. REAL ESTATE DE&ARIMEKT. 

PROPERTY OI- /Wl.4. ^.3,<.^C_a -r^l V6< ^t-VvrVA^^ IN OUH 


CHARGE 










M.UMU . 


•test 


™«« 


,»»'■ 






flSf i<^<La,-,\ r$/. 


ik 




&L,^^. ^4r 








-^(,0 (PjLviT -Sf\ 


2-C 




a^>A^ <n*iPi* 




















) 







































































Fig. 269. — List of Property. 



Oi. S^j jct- . 



. ■ /-!-— = — ; — . =- <*« — ■ 


l_ 

LOCATIOS 


TENANT. 


■fS 




m& 


IS 


~T. 


Docrlpthk 


"HH 8 


^TS- 


p«™ t 


HOW PAYABLE. 


JANUARY 


FEBRUARY 




te**~»/ . 


c, 


•in 


i 


<o 


V 


/ll 




■■?"/« 


*«M 














3I 


2S 


t.t 


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<Z.U J -~>*~ a ~*&. 


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«fr. 












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'tot 


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1 



Fig. 270. — Rent-Roll Book. 



294 



TRUST COMPANIES. 



Repairs or supplies for buildings in charge of the department are or- 
dered upon written requisitions like that shown in Figure 268, of which 
carbon copies are retained by the company. 

Figure 269 shows a loose-leaf form used to list properties in charge 
of the department. 

The left-hand page of a "Rent roll book/' permanently bound, is 
shown in Figure 270. The width of the page is 18 inches. The record 
is continued on the right-hand page of the book, the columns of whihc 
are headed with the names of the months from March to December, 
inclusive. This answers the double purpose of a rent book and a list 
of properties handled for each landlord. 

Forms for the record of insurance and taxes on real estate held in 
the trust department have been shown in Figures 74, 75, 76, 77 and 78. 
Other forms for such records are shown in Figures 271 and 272. 

Figure 273 shows a statement of rents collected. The sheets are 
arranged in a loose-leaf binder with a duplicate form underneath, so 
that when the sheet is torn out to send to the customer, a copy of the 
statement in permanent form is retained. 



COMMONWEALTH TKUST CO.. REAL ESTATE 'DEPARTMENT 







LANDLORDS' INSURANCE RECC 


Ki 




L i/ <i-)-U*Jhyht~ 


i i : / ] '-" j 




«? lic "'°- 


™™ 


™, 


— 


— 


_ 


W...T.ON 


— 


mm,*u. 




a.. 


U1 


.IA. 




1 2£ 4-1 q 


9U£~*j?f 91.^. 


W& 1U±. {fnAs*^. <§/-. 


/ 


<;oo 


IS 




?* 


%nr. 


7.S 


ok 


JGJXA0*J 








i 





































































































































































Fig. 271. — Insurance Record. 



The Tickler or Maturity Index of this department does not differ in 
principle from those of other departments already described. Either 
cards or bound books are used, according to preference. 

The methods of accounting for this department vary according to the 
extent of the business, and the tastes of the officers. The general methods 
already described for the estates division of the trust department are for 
the most part adapted to the use of this department. Original entries 
may be made upon debit and credit tickets, such as have been shown in 
Figures 158 and 159, and from them be entered in the journal, or may 
be entered at once in an ordinary cash-book. For a journal, the form 
shown in Figure 274 is convenient. The names of the accounts are en- 
tered in the middle column, descriptions of items at the sides. The ledger 
forms shown in Figures 16 and 17 are convenient for accounts in this 
department. Ordinary ledger forms are also used. 

Forms of rent books have been shown in Figures 70, 71, 72, and 
in Figure 270. Another form is shown in Figure 275. The top of the 
page being blank, such memoranda may be entered as the bookkeeper or 
officer in charge prefers. 



FORMS FOR REAL ESTATE DEPARTMENT. 



295 



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296 



TRUST COMPANIES. 



RENT COLLECTIONS POP PROPERTY OF MtS. 



ytUxy^^T &i 



y^oT. 



.3^7 9<<>-L,£tlk CL<a. . 





prom 1 W. 3o 190 6 to^W<:.3' /90& ST. LOUIS, 






2 


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Fig. 273. — Statement of Rents Collected. 



403 













Iournal. Jut* 


\jfclA-l> >«isi.\A-UX.\J" 


AT Ilol. 


















1 


■ TOTAL Dft 




DEVI 


OEVSCRI-PTION 


»»»», 


DESCRIPTION 


CREDIT 




TOTAL CS. 




'. . 
















&tf&J,»A~J . 


(Rtsyj SZ4 CLrfL^r £f . 




2 7 






























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<R. 3. #rA.-w 




























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Fig. 274. — Journal. 



t * -1 1 f\ 


yVnr«i/€t &. - (>un*juL X>-,j 


<#.£. A^o. 






























$ l ^a^rf- [ QrOsX^. UnlxL^, $nr~. fyl I . mi & <&** *3.G n„ ^3* 




-, -THairiwi-wwragrr"" -,^-r-- 'v — f as: , 
DISBURSEMENTS 






RENTj 


RECEIPTS 




SUNDRV 


Receipts 




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Fig. 275. — Rent Book. 



CHAPTER XL 
THE TITLE INSURANCE DEPARTMENT. 

LA.WS have been enacted in many of the states throughout the coun- 
4 try during the past twenty-five years providing that companies 
may be incorporated for the purpose of guaranteeing or insuring 
the title to real property and to conduct a mortgage loan and trust com- 
pany business; the latter, however, being consistent with the powers 
granted them as such title guarantee or insurance companies. Among 
the powers of such a company is the right and authority to prepare and 
furnish bonds, mortgages and other securities and to guarantee the valid- 
ity and due execution of the same as well as the performance of contracts 
incident thereto ; to make loans for itself or as agent or trustee for others 
and to guarantee the collection of interest and principal of such loans; 
to take charge of, sell, mortgage, rent or otherwise dispose of real estate 
for others, and to perform all the duties of an agent, or trustee, relative 
to property conveyed or otherwise entrusted to it. Such title guarantee 
and trust companies have been organized and are doing business in most 
of our large cities. These companies preliminary to commencing work 
usually acquire the books or records of local abstract firms, or corpora- 
tions, as a basis for their future guarantee plants. During the past dec- 
ade the growth of these companies has been very rapid by reason of their 
extensive operations resulting from their combined powers. Experience 
has proven that in the consolidation of the guarantee and trust features 
better results have been obtained for each; this is very well illustrated 
in the case of a mortgage loan made by the company; after the loan has 
been approved and accepted the title to the property to be secured by 
the mortgage is guaranteed by the company ; after which, if desired, the 
mortgage can be placed upon the market and be handled to better ad- 
vantage than one not so guaranteed. 

In order to fully understand how such companies transact their busi- 
ness in the exercise of their powers enabling them to issue their different 
forms of policies of title insurance it is necessary to go into detail and 
explain their procedure. 

To begin with the title insurance company owns its abstract plant, 
built on the most modern and approved plan, consisting of a complete 
history of the title to all of the real estate in the territory where it does 
business, including not only a transcript of the deed, mortgage, probate 
and tax records, but of all other matters of record which may affect the 
title, such as judgments, decrees, executions, levies and pending suits in 
any court of record, whether federal, state, county or municipal, includ- 
ing also plats and maps showing partitions, subdivisions, street and alley 
openings and vacations, etc. The necessity for this is obvious, for in 
guaranteeing titles the company must be absolutely certain that the ab- 

20 297 



298 



TRUST COMPANIES. 



stract work is accurate and beyond question, and this can only be accom- 
plished by using a plant over which it has full and complete control and 
supervision. 

In applying for title insurance it is not only customary but the rule 
to require applicants to fill out printed applications for the same, wherein 



PormlP. 44&05. Ml 

No „ -.- Cleveland, O ^&<P14<U&up..^X£. i9cyT 

The undersigned hereby employs The Guarantbe Title and Trust Company to examine/the title to premises 
hereinafter described, and ifLit ^approves of the same^to issue a Policy in its usual form against liens or defects in 

the sum of ....Qjj&ku ym&sm&aza^ %./aaaa. 

For a premium of. <Z^c£/..,^£44^k2^ . . . $ _/.£]-0., 



/oo ctvus &* 'fa. *p. 75% ' 



Brief description of premises... 
House Ko.'B.Qf.'J.. , 




<£?(9 




/2-d 



^yC^c/3^. 






Premises now owned by.. 



Estate or interest to be insured. 



cT^W sSA^tfi&S 



Party to be insured.. 




$ / y U W(Mm<UUlf Address,^^^^ 4€/:2 ^^ 






By what means and at what time was 
title vested or to be vested in party 
to be insured. 



Estimate of value, %./Q.Q.OO.i. 



■Jjjl/JfTimt/ Cd./d.J&OAW.jjbwf . 



&. /9C 7 



Realty 



, $ Sl2.Q_0_Q>_ Improvements, %.7.U.Q. 



0, 



Encumbrances and adverse interests,- 
known or rumored, and by whom 
held or claimed 



Q/aO<Mls -<r 



/$C (o 



.knowledge and belief, and are 



It is agreed that the foregoing statements are true to the best oi.^J&L&fc:.. 
representations on the faith of which said Policy is to be issued. yf 

The applicant hereby agrees that if, before the delivery of the Policy, he or his agent, should have any notice or 
information as to defects, objections, liens or incumbrances affecting the title to be insured, he will at once fully make 
known the same to the Company. 

The applicant understands that under the Policy to be issued, the Company will not insure against special assess-. 
ments or liquor taxes, nor the rights and claims of parties in possession not shown of record, nor conveyances, agreements 
or mechanics' liens not filed or of record at date of issuance of Policy. 

The applicant hereby agrees that whenever the Company notifies him that it will issue a Policy, he will accept the 
same and pay the premium therefor. 

If the Company, after examination declines to issue the Policy on account of defects in the title, the applicant agrees 
to pay the necessary expenses incurred by the Company in making such examination. 




^Zfe??^W<kppKcant. 



Fig. 276. — Application for Guarantee of Title. 



are to be found a number of questions relative to the proposed insurance 
and which are agreed upon to be a warranty of the facts therein con- 
tained. Figure 276 shows a form of such application. 

It will be observed that the application shown as Figure 276 is in- 
tended for an owner's policy; the form for an application for a mortgage, 



THE TITLE INSURANCE DEPARTMENT. 299 

leasehold or any special policy is the same, but the answers to all of the 
questions relating thereto must be consistent with the estate or interest 
to be insured. 

After the application has been received and accepted by the company 
an abstract of the title to the property sought to be guaranteed is pre- 
pared and submitted to the title officer of the company. If, in his opin- 

THE 

Guarantee Title and Trust Company, 

CLEVELAND, OHIO. 



No. 19551. 



Policy of Title Insurance. 



THE GUARANTEE TITLE AND TRUST COMPANY, by this policy of insurance, in 
consideration of the sum of One Hundred 00A00 Dollars ($100.00) 



dollars to it paid, insures John Benson Thomas , his 



executors, administrators,' heirs and devisees, and all other persons to whom this Policy may be 
transferred .with the assent of this Company, testified by the signature of its proper officer endorsed 

on this policy, against all loss or damage not exceeding Ten Thousand oo/loo Dollars , 

( $1 0000 . 00 ) , 

dull in , which the insured shall sustain by reason of defects, or unmarketability of the title of the 
insured to the estate, mortgage,' or interest described in Schedule A, hereto annexed, or because of 
liens or incumbrances charging the same at the date hereof, excepting only such liens, incumbrances 
and other matters as are set forth in Schedule B, or excepted by the conditions of this policy hereto 
annexed, and hereby incorporated into this contract, the loss and the amount to be ascertained in the 
manner provided in said conditions, and to be payable upon compliance by the insured with the 
stipulations of said conditions arid not otherwise. 

This Policy is issued upon application by or on behalf of the insured, numbered 19551 , 
and agreed by all parties claiming hereunder to be a warranty of the facts therein stated. 

In Witness Whereof, The Guarantee Title and Trust Company hath caused its cor- 
porate seal to be hereto affixed and these presents to be signed by its President and attested by its 

Secretary, this— Eighth day of January (S — in the year of our Lord one thousand 

nine hundred and seven, at 3:40 P. M. 




t^L^h^, 




Attest ; 

Secretary. 



Jig. 277. — Iitle Insurance Policy (first page). 

ion, the title is insurable, he directs the issuance of the policy in accord- 
ance with the forms shown as Figures 277, 278, 279 and 280. If the 
owner of the estate to be guaranteed is a corporation, co-partnership or 
association, the policy would run to it, its successors and assigns, instead 
of to a person, his or her executors, administrators, heirs and devisees, 
as shown in Figure 277. 



300 



TRUST COMPANIES. 



Figure 278 shows an absolute or fee simple estate guaranteed. This 
form is commonly known as an owner's policy and is used as such, and 
the company's liability thereunder is forever, or until the policy is sur- 
rendered and cancelled, in accordance with its conditions. 



Policy No. 19551. 



Schedule A. 



1. The estate or interest of the insured in the premises described below, covered by this policy. 

Pee Simple. 




or other means by which the estate or interest covered by this policy is vested in the insured. 

An undivided one -half interest in premises described below by 
Descent through the Estate of S. P. Burke, deceased. Estate admin- 
istered upon in Cuyahoga County Probate Court , Docket 101 , No .16378. 
An undivided one -half interest in premises described below by 
War rant v Deed from A. D. Fraser and Mary A. Eraser, his wife , to 
John Benson Thomas, dated January 8, 1907, filed for record 
January 8, 1907, at 3:40 P. M,,and being Pile No. 550,731. 

£ The premises in which the insured has the estate or interest covered by this policy. 

Situated in the City of Cleveland, County of Cuyahoga and State 
of Ohio, and known as being SubLot No. 3t> in V. C. Leslie's Sub- 
division of part of original One Hundred Acre Lot No. 491 , as 
shown by the recorded plat in Volume 60 of Maps, Page 3 of 
Cuyahoga County Records, ana being 40 feet front on the Easterly 
side of E. 132nd Street and extending back of equal width 120 
feet deep, as appears by said plat. 




Fig. 278. — Title Insurance Policy (Continued). 



In other forms of Schedule "A" (Figure 278) where the estate or 
interest insured is for life, term of years or mortgage, Item 1 of the 
schedule would show the nature of the estate insured and Item 2 would 
disclose the source by which that estate was vested in the insured. 



THE TITLE INSURANCE DEPARTMENT. 301 

The company's liability under these latter forms of policies ceases 
upon the death of the life tenant, termination of the leasehold or dis- 
charge of the mortgage, respectively. 

Other interests or estates, such as rights of way, party walls, re- 
strictions and the like are insurable and the form shown as Figure 278 
can be used and fitted to meet these special requirements. 

Policy No. 195 51 . 

Schedule B. 

This policy dots nol insure against such estates, interests, defects, objections to title, liens, charges, dnd incunlbrances affecting said 
premises, or the estate or Interest Insured, as are set forth below in this schedule. 



1: Mortgage fron A. D. Fraser and Mary A. Fraaer, his wif e , and John 
Benson Thorias , single, to Charles F. Laughlin, for &&000.00, dated 
November 8, 1906, filed for record November 9, 1906, at 10:35 A. M. , 
and recorded in Volume 2060, Page 31 of Cuyahoga County Records. 



2: The Taxes of 1906: The Treasurer's General Tax Duplicate shows $84.34 
duet 
Special Taxes and Assessments ef any kind, if any. 



Fig. 279. — Title Insurance Policy (Continued). 

Figure 279 shows Schedule "B" of the policy. Under this schedule 
all the defects, liens, incumbrances and objections against which the com- 
pany does not guarantee or assume any liability are briefly enumerated; 
however, if the insured desires the objections to be spread in detail upon 
the schedule it can be done by the company, otherwise resort to the rec- 
ords, for particulars, will have to be made. 

The conditions under which the policy is issued are as follows: 
Policy No. 19551. 

Conditions of This Policy. 

1. THE GUARANTEE TITLE AND TRUST COMPANY will, at its own 
cost, defend the insured in all actions or proceedings founded on a claim of title 
or incumbrance prior in date to this Policy and not excepted therein. 

2. No claim shall arise under this Policy, except under section 1 of these 
conditions and except also in the following 1 cases: 

(I) Where there has been a final determination in a court of competent 
jurisdiction, under which the insured may be dispossessed or evicted from the 
premises covered by this Policy, or from some part or undivided share or inter- 
est therein. 

(II) Where there has been a final determination, adverse to the title, as 
insured, in such a court, upon a lien or incumbrance not excepted in this Policy. 

(III) Where, in cases of guarantee of the interest of a mortgagee the mort- 
gage has been finally adjudged, by such a court, to be invalid, or ineffectual to 
charge the premises described in this Policy, or a lien inferior to that desig- 
nated in this Policy. 

(fV") Where the insured shall have transferred the title insured by an instru- 
ment containing covenants of title or warranty, and there has been a final judg- 
ment rendered in such a court against the insured, his heirs, executors, admin- 
istrators, or successors on any such covenants or warranty and because of some 
defect of title or incumbrance not excepted in this Policy. 

(V) Where the insured shall have contracted in good faith in writing to sell 
the insured estate or interest, and the title has been rejected because of some 
defect or incumbrance not excepted in this Policy, and notice in writing of such 
rejection shall have 'been given to this Company within ten days thereafter. For 
thirty days after receiving such notice, this Company shall have the option of 
paying the loss, of which fhe insured must present proper proof, or of maintain- 



302 TRUST COMPANIES. 

ing or defending either in its own name or at its option in the name of the in- 
sured, some proper action or proceeding, begun or to be begun in a court of 
competent jurisdiction, for the purpose of determining the validity of the objec- 
tion alleged by the vendee to the title, and only in case a final determination 
is made in such action or proceeding, sustaining the objection to the title, shall 
this Company be liable on this Policy. 

(VI) Where a purchaser at a sale under the judgment or order of a court 
of competent jurisdiction has been relieved by the court from a purchase of the 
insured estate or interest by reason of the existence of some lien, incumbrance 
or some defect of title not excepted in this Policy. 

(VII) Where the insured shall have negotiated a loan on the security of a 
mortgage on an estate or interest in land insured by this Policy, and the title 
shall have been rejected by the proposed lender, this Company, if there is no 
dispute as to the facts, will consent to the submission of the question of the va- 
lidity of the title, as insured, to the Common Pleas Court for the County in 
which is situated the property affected by this Policy, and upon the judgment of 
such court shall then depend the liability of this Company. 

3. In case any action or proceeding described in Section 1 of these condi- 
tions, is commenced, or in case of the service of any paper or pleading, the ob- 
ject or effect of which shall or may be to impugn, attack or call in question, 
the validity of the title hereby insured, as insured, or to raise any material ques- 
tion relating to a claim of incumbrance hereby insured against, or to cause any 
loss or damage for which this Company shall or may be liable under or by vir- 
tue of any of the terms of this Policy, or in case any action or proceeding is be- 
gun that may have such object or effect, it shall be the duty of the insured to 
at once notify the Company thereof in writing and secure to it the right to main- 
tain or defend such action or proceeding, and to give all reasonable assistance 
therein, and permit it to use, at its option, the names of the insured. If such 
notice shall not be given to the Company within ten days after the service of 
summons or other process in such action or proceeding, then all liability of this 
Company in regard to the subject matter of such action or proceeding shall 
cease. Provided, however, that an assignee for value of the Policy, with the 
consent of this Company thereon endorsed, shall not be affected by such failure 
to notify, if such assignee through ignorance of the beginning of any such action 
or proceeding shall have been unable to give or cause to be given the notice re- 
quired by these conditions. This Company will pay, in addition to the amount of 
the loss, all costs imposed on the insured in litigation carried on by it for such 
party under the requirements of this Policy, but it will in no case be liable for 
the fees or other charges of any counsel or attorney employed by the insured. 
and the costs and the loss paid shall not together exceed the amount of this 
Policy. 

4. Whenever the Company shall have settled a claim under this Policy, it 
shall be entitled to all the rights and remedies which the insured would have 
had against any other person or property in respect to such claim, had this 
Policy not been made, and the insured will transfer or will cause to be transferred 
to the Company such rights, and to permit it to use the name of the insured for 
the recovery or defense thereof. If the payment does not cover the loss of the 
insured, the Company shall be subrogated to such proportion of said rights as 
the amount paid bears to the amount of loss not thereby covered. The insured 
warrants that such rights of subrogation shall vest in the Company unaffected 
by any act of the insured. 

5. Nothing contained in this Policy shall be construed as a guarantee against 
defects or incumbrances arising after the date hereof, or created or suffered by 
the party guaranteed; nor will this Company be liable in any event for loss or 
damage by reason of liquor taxes; nor by reason of taxes or special assessments 
which have not been entered upon the County Auditor's Duplicate; nor convey- 
ances, agreements or mechanic's liens, not filed or of record at the date hereof; 
nor the rights or claims of parties in possession not shown of record. 

6. In every case where the liability of this Company has been definitely 
fixed in accordance with these conditions, the loss or damage shall be payable 
within thirty days thereafter. Provided, however, that in every case this Com- 
pany may demand a valuation of the estate or interest insured, to be made by 
three arbitrators or any two of them, one to be chosen by the insured, and one 
by this Company, and the two thus chosen selecting the third; whereupon no 
right of action shall accrue until thirty days after notice of such valuation shall 
have been served upon this Company, and the insured shall have tendered a 
conveyance or transfer of the estate or interest insured to a purchaser to be 
named by this Company, at such valuation, less the amount of any incumbrance 
on said estate or interest not hereby insured against, and this Company shall 
have failed within that time, during which said tender shall 'be kept good, to find 
a purchaser for the estate or interest upon such terms. And provided, also, that 
this Company shall always h:.ve the right to appeal from any adverse determi- 
nation; but no appeal shall operate to delay the payment of the loss, if the in- 
sured shall give to this Company satisfactory security for the repayment to it 
of the amount of such loss in case there shall be ultimately a determination in 
favor of the Company. In every case this Company shall have the option of set- 
tling the claim or paying this Policy in full; and the payment or tender of pay- 
ment to the full amount of this Policy shall determine all liability of the Com- 
pany under it. 

7. Any untrue statement made by the insured or his agent affecting the 
subject matter of this Policy, or any suppression of any material fact, or any 
untrue answer by the insured or his agent to material inquiries, before the is- 
suing of the Policy, shall avoid the Policy; but an assignee for value to whom 
the Policy has been transferred with the consent of the Company endorsed there- 



THE TITLE INSURANCE DEPARTMENT. 



303 



on, shall not be affected by any such untrue statements or answers, or by such 
suppressions or breach of warranty in the application, of which he was ignor- 
ant at the time the assent to the transfer to him was endorsed by the Com- 
pany. 

S. All payments under this Policy shall reduce the amount guaranteed pro 
tanto, and no payment can be demanded without producing the Policy for en- 
dorsement of such payment. If the Policy be lost or destroyed, indemnity must 
be furnished to the satisfaction of the Company. 

This Policy Necessarily Relates Solely to tie Title Prior to and Incloding its Date. 



Assignments of this Policy must be with the assent pf the Company endorsed hereon, and to protect subsequent 
purchasers against intermediate claims or losses, must be continued to date. 

In assenting to assignments no liability is assumed by the Company for defectsor incumbrances created subsequent 
to the date of this Policy. 



ASSIGNMENTS OF POLICY. 



Cleveland, Ohio, April 16, 19 07 , For Value Received I 

in this Policy to Eva M. Hubbard. 



hereby assign all interest 



Assented to 



^s£^-<^-^ 



Cleveland, ^ 

in this Policy to ( 




y <£, 1 9 tf^ysubject to foregoing conditions 



The GuaranxbeTitle and Trust Co. 



By 



For Value Received 




Hereby assign all interest 



Assented tc 



19 subject to. foregoing conditions. 

Thb Guarantee 1 Title and Trust Co. 



By 



Cleveland, Ohio , January 8 , 19 07 . 

Loss, if any, payable to CharJLs.&- J'-.-iaUghlln-,- „__., Mortgagee, as.-h±S 

interest may appear. 

The Guaraj*35»-Title and Trust Co. 



Cleveland, 

Loss, if any, payable to. 

interest may appear. 



19 



By 




Secretary* 

.. , Mortgagee, as.. 



The Guarantee Title and Trust Co. 



By 



Fig. 280. — Title Insurance Policy (Continued) 



Sometimes the applicant for insurance requests the company to issue 
the policy in the name of his grantee of record, instead of having the 
policy issued in his own name, which request is usually granted and also 
if the request be made by such grantee that the company eliminate from 
the form shown as Figure 277 the words "This policy is issued upon 

application by or on behalf of the insured numbered and agreed 

by all parties claiming hereunder to be a warranty of the facts therein 



304 



TRUST COMPANIES. 



stated," as well as paragraph 7 of the conditions of the policy above 
shown, such request can be granted. 

In the form shown as Figure 277 provision is made to insure the 
assignee provided the policy is transferred with the consent of the com- 
pany, which consent must be testified to by the signature of the proper 
officers endorsed on the policy. The forms of the assignment of the 
policy are shown as Figure 280. 

THE 

Guarantee Title and Trust Company, 

OR OHIO. 



No>28615. 



EXTENSION OF 



Policy of Title Insurance. 



THE GUARANTEE TITLE AND TRUST COMPANY, by this Extension Policy of Title 

Insurance, in consideration of the sum of ■■, Five 00A00 Pollin: 

($ 5 .00 ) extends its obligations under Policy of Title Insurance No. 19551 , to which this 

is attached, according to all the terms, exceptions, stipulations and conditions of said policy, but not as 
against the additional matters set forth below. - — — — — — — — — — — _____ ^—______ 



Judgment for $100.00 damages and $10.13 costs, with interest, against 
J. 3. Thomas , rendered January Term 1907 , in case of W. J. Bower 
against J. B. Thomas and others, No. 130,625, Execution Docket 150, 
Page 71 in Cuyahoga- County Court of Common Pleas. . 



The Taxes of 190^. 

Special Taxes and Assessments of any kind, if any. 



fitness Whereof, The Guarantee Title and Trust Company hath caused its cor- 
porate seal to be hereto affixed and these presents to be signed by its President and attested by its 

Aaawtant Secretary, this Seventh day of — March in the year of our Lord one 

thousand nine hundred and seven, at 4:01 P. M. 




^2UrS^£, 



Jtttcst : 




j&ssft Secretary 



Fig. 281. — Extension of Policy. 



In assenting to such assignments no liability is assumed for defects 
liens or incumbrances created subsequent to the date of the policy. 

It very frequently happens that the owners of policies, other than 
that of a mortgage policy, desire that the original policy be extended to 
cover a subsequent date. This can be done by either of two methods: 



THE TITLE INSURANCE DEPARTMENT. 305 

First — By attaching the form shown as Figure 281 to the original 
policy, if there has been no change in the ownership of the title, and 

Second — If there has been a change in the title, to cancel and sur- 
render the original policy and substitute, in lieu thereof, a new policy in 
the name of the new owner with all the attending objections as would 
necessarily be shown in Schedule "B" the form of which is shown as 
Figure 279.? provided, however, that in either of these two cases nothing 
has been done to avoid the original policy. 

A mortgage policy can not be extended for the reason that the guaran- 
tee or liability thereunder is limited, the company guaranteeing the mort- 

Cleveland, Ohio, .April Twentieth 1907. 

WIEREAS, Polioy of Title Insurance No. 19651 and Extension thereof 
No. 28615, guaranteeing the title to Sublot No. 30 in V. C. Leslie's Subdivision 
of part of original One Hundred Acre Lot No. 491, as shown by the recorded plat 
in Volume 60 of Maps, page 3 Cuyahoga County Records, issued by THE GUARANTEE 
TITLE AND TRUST COMPANY, January 8th, 190,7 and March 7th, 1907 respectively, 
have been nisi aid or lost; 

NOW THEREFORE, in consideration of THE GUARANTEE TITLE AND TRUST 
COMPAIIY having re-issued said Policy of Title Insurance No. 19551 and Extension 
thereof No. 38615, under Policy No. 30506 and delivered the same to Charles 7 
Laughlin, we hereby waive all right, title and claim, which we or either of us 
may have in, to and under said Policy No. 19551 and Extension thereof No. 28615, 
and do hereby promise and agree to return said Policy and Extension so mis- 
laid or lost to said THE GUARANTEE TITLE AND TRUST COMPANY for surrender and 
cancellation, should the same ever come into our possession. 







Fig. 282. — Release of Claim. 

gage to be a first lien on the premises secured by the mortgage at the date 
of record, except what might be spread upon Schedule "B" shown as 
Figure 279- 

It may be well to note that in the event of loss, destruction or mutila- 
tion of a policy, the company will, upon satisfactory proof thereof, issue 
a duplicate of the original policy provided the insured will waive or re- 
lease all his or their right, title and claim in, to and under the original 
policy. For form of such release see Figure 282. 

Carbon copies of all policies, and their assignments, issued and as- 
sented to by the company, are preserved, and a record of all such policies 



306 



TRUST COMPANIES. 



and assignments is kept in a book especially made and provided for that 
purpose, termed a "Policy Register/' a copy of which is shown as Fig- 
ure 283. 

Figure 283 completes the list of forms used in the issuance of policies 
of title insurance, and the last thing now to be considered is the worth 
and value of title insurance as a means of security and protection to the 
party guaranteed under the contract with the company, which contract 
may be defined to be an agreement whereby the insurer, for a valuable 
consideration, agrees to indemnify the insured in a specified amount 
against loss through defects of title to real estate wherein the latter has 
an interest, either as owner or otherwise, and against liens and incum- 
brances charging the same, there being, however, no implied agreement 
on the company's part to go beyond the conditions of the title existing at 
the time the policy is issued or to assume a general liability to indemnify 
against future liens or incumbrances. 









THE GUARANTEE TITLE AND TRUST COHPANf. 


















POUCr REGISTER, 














»™ 


r,^ 


CSV.*, 




— 


— ■ 


"T 


w 


uuotmBm 


C»*a!IXED 








DTO 


<—■>»"> 


D... 


A.M.I 


I J-. 1 ■ 








AmoMttl Forwdrdfd, 




















„. 






















A3551 


r *?-' -..jz^LtZ?.....^ 






• r-. 












/ */■<&__. 


■2-4 




.SaSi^feSf^fe-!-"* 




r 


Vfl* 




„ ,.,: 






19552 


Jr 


























: 
















19553 












































lassi. 






" 






































19555 












































19556 












































19557 












































19558 












































19559 












































19560 






































i 



Fig. 283. — Policy Register. 



The form and method of such protection is governed by the law of 
the state where the land is located, the title to which is guaranteed. 

In some localities, before a company can issue its policies, it must 
deposit with the proper state officials sufficient collateral to guarantee and 
protect the policy holders against loss which they may sustain in the non- 
performance of the company's contracts of title insurance with them. 

The deposit required for such protection, as above, may consist of 
gold coin, United States bonds, state securities, stocks, first mortgage 
loans on real estate and other approved securities, the amount and nature 
of which are regulated entirely by state legislation. 

In addition to this, further protection is afforded by the capital stock 
and assets of the company. 

With this kind of assurance a policy holder may feel fully protected 
in his investment or guarantee. 



CHAPTER XII. 
METHODS OF INCREASING BUSINESS. 

CONTRARY to the conditions a few years ago, a consideration of 
methods of increasing the business of a bank or of a trust company 
at once suggests the subject of advertising. The dignity of the 
profession no longer forbids advertising, although success in such adver- 
tising still demands dignity. 

The successful trust companies of to-day advertise. Their advertise- 
ments are not the formal and unattractive cards of former years, nor 
are they of the cheap and flaring style of the circus poster. Advertising, 
in the ordinary signification of the word, is of course not the only means 
used by progressive companies for increasing their business, but it is now 
firmly established as one of the important means. The change in attitude 
regarding the expediency of trust company or bank advertising has come 
in part through the necessity imposed by keen competition, in part through 
a more intelligent consideration of the ethics of the bank advertising 
question. It has come, too, as part of a general progress in the art of 
advertising. Without question the people read advertisements far more 
than formerly. Partly as a cause and partly as a result of this, present 
day advertisements are more readable. The importance of the advertis- 
ing column or page has increased, and its quality has improved. 

Reasons Why a Trust Company Should Advertise. 

The reasons for advertising on the part of a trust company are more 
numerous and more forceful than those for advertisements on the part 
of a bank. Aside from the fact that competition makes it, in most locali- 
ties, fairly a necessity if the company wishes to grow, there are the facts 
that the trust company has a much wider scope and more features to 
advertise than has the bank, and that the trust company is still a new insti- 
tution, whose functions are little understood by the people at large. 
Comparatively few, indeed, understand exactly what a bank can do for 
its customers; and fewer still what services a trust company can render. 
In the education of the public as to the extent and the variety of the 
trust company's functions, there is virgin soil for cultivation by the adver- 
tiser. 

There is also a fruitful field for the advertising trust company in the 
seeking of deposits from people who have never had bank accounts. 
Nearly everybody has at least a little money, but less than a maj ority of 
the people have money on deposit. 

It follows that some of the advertising of the trust company must bt 
of the "educational" kind; i. e., must be devoted to explaining what a 
trust company is, and how it can be used, and to inculcating habits of 
saving and thrift among the people. The results of such advertising will 
help the business of other companies as well as that of the advertiser, 

307 



308 TRUST COMPANIES. 

Short-sighted, however, would be a policy of refraining entirely from 
such publicity because of this fact. In the end its effect upon the busi- 
ness of the advertiser, as well as upon the business in general, must b^ 
beneficial. The recently formed "Banking Publicity Association" is doing 
a good work in seeking to distribute the burden of this educational adver- 
tising. 

The economic effects of this form of publicity by banks and trust 
companies are of more than passing interest. The principles of economy, 
thrift, self-denial, abstinence from extravagance are instilled into the 
minds of the people. In this respect, financial institutions are doing for 
the present generation what Benjamin Franklin did for his. The evil 
effects of get-rich-quick and other fake schemes are in part counteracted. 
Money hidden away in the traditional stocking is brought into circula- 
tion and use, thereby increasing the available capital of the general 
public. The field for robbery and exploitation is narrowed. 

Direct or Individual Advertising. 

General writers on the subject of advertising divide it into two classes 
— general advertising and direct advertising. The former is designed to 
create a demand for the product ; the latter, to make sales direct from the 
advertiser to the consumer. In financial publicity the corresponding 
classes are educational and individual advertising. Both are intended 
to increase the business of the advertiser, but it is evident that the latter 
will, under favorable conditions, produce this result the more directly. 
However, it is an art which requires skill and tact. Its expediency is no 
longer questioned by the majority of bank and trust company officials; 
yet it is a kind of advertising which must be conducted along lines some- 
what more conservative than are proper for other kinds of business. It 
need not and should not be unattractive and lifeless; but it must not be 
in any way cheap or sensational. In the minds of some of the people 
there doubtless lingers some question regarding the propriety of a bank 
advertising for business. A too strenuous bid for deposits may easily 
suggest that the company is badly in need of funds, and so tear down 
rather than build up the business. Above all, trust company advertising 
must be thoroughly honest and straightforward. 

Management op Advertising. 
The larger companies maintain an advertising department, in charge 
of a man specially qualified for the work, and with a corps of stenogra- 
phers or other assistants. The man in charge is given various titles by 
different companies — Advertising Manager, Manager of Publicity, Adver- 
tising Agent. He should have not only natural qualifications for the 
work, but also a special training; for advertising is a science the mastery 
of whose principles and details requires careful study. The advertising 
manager must understand human nature, possess common sense, be a 
master of good plain English and have the knack of stating things in 
clear, concise, attractive and convincing manner. A practical training in 
bank or trust company work is desirable, and in any event he must thor- 



METHODS OF INCREASING BUSINESS. 309 

oughly understand the essential points of the trust company business. 
He should have a working knowledge of the printer's art, know some- 
thing of type faces and sizes, of engraving processes, of electrotyping, 
of qualities and prices of papers, understand the principles of display, 
know how to read and correct proof, and be familiar with mediums of 
advertising. 

Sometimes the advertising manager acts also as Auditor or as Pur- 
chasing Agent. Frequently in smaller companies one of the regular 
officers is detailed for this work as a part of his duties. In any case, the 
work should be in charge of one man who makes it his business to attend 
tc it. If left to be looked after by any one of the officers who may 
happen to think of it, as is the practice in some companies, the inevitable 
result is advertising of a spasmodic and ineffective kind. 

In small companies, having but one active officer, the advertising will 
of course be one of the many duties of that officer, but a duty which he 
must attend to systematically if his institution is to grow. 

The records of the advertising department are simple, and few in 
number, but should be devised and kept with care. Samples should be 
kept of all advertising matter issued, scrap-books being provided for 
advertisements appearing in periodicals, follow-up letters, etc., and files 
for circulars, booklets and novelties. A diary or journal should be kept, 
showing what advertising matter is sent to persons on the advertising 
lists, and when sent, and recording any matters about which it may in 
the future be essential to have exact information. A record of results 
of advertising campaigns is desirable, and to this record the other de- 
partments of the company will need to contribute lists of new accounts, 
new trusts, new safe deposits renters, etc., traceable to advertising. The 
department needs a Tickler, cards being most convenient for the purpose. 

The advertising lists are kept on cards, of which two forms are shown 
in Figures 284 and 285, the cards being arranged alphabetically in cases 
or drawers of cabinets. It is usually desirable to have separate lists of 
different classes of people, and this may of course be done by having 
the cards for each list filed in a separate case. Often also it is best 
to have separate lists of the "prospects" of each department. The 
division into classes may still be maintained when all the cards are filed 
together alphabetically, either by using different colored cards for the 
different classes, or by using tabs at the tops of the cards, as shown in 
Figure 284, — all the tabs being cut off each card except the one wanted. 
A more elaborate classification may be obtained by a combination of the 
two methods, using cards with tabs, printed in different colors. The 
filing of all the cards in one list is a protection against duplication of 
names, which should be carefully avoided. 

In Figure 284, the consecutive numbers at the bottom of the card 
refer to the advertising matter sent to the person named on the card, 
the scrap-books or diaries showing what was included, for instance, in 
advertising matter number 5. When the matter is mailed, either a check- 
mark or the date is inserted in the little square which shows the corre- 



310 



TRUST COMPANIES. 



sponding number. The provision for 94 numbers on the card does not 
mean that so manv advertisements are apt to be sent to each "prospect" ; 
but a given person may receive Nos. 2, 5, 7, etc. Space is left at the 
right of the card for a record of letters sent to or received from the 
"prospect", and additional memoranda may be made on the back of the 
card. Figure 285 is self-explanatory. The record on the lower half of 
the card is continued on the back. The size of the cards is 3x5 inches. 
The preparation of mailing lists is a laborious and important part 
of the work, and should be handled with great care to select the names 
judiciously, to have the names and addresses correct, and to recognize 
the cards of those who become customers or whose mail is not delivered. 
The sources from which the lists may be compiled include lists of mem- 
bers of clubs, societies^ organizations, churches, women's clubs, mercan- 



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tile agency registers, city and telephone directories, voters' lists, lists of 
teachers, policemen, firemen, attorneys, business houses, permanent resi- 
dents of hotels and apartment houses, post office and rural free delivery 
lists when obtainable, acquaintances of directors, officers and employees, 
persons who answer advertisements. One company when starting busi- 
ness in New York city employed men to go through the city directory 
and compile selected lists of names. Special or temporary lists of various 
kinds are made up from time to time as occasion arises. 

Planning an Advertising Campaign. 

The best results are obtained by carefully planning in advance the 
main features of the advertising campaign for the year. A definite sum 
should be available for the purpose, but should not be exhausted by the 
plans made at the start — a sufficient amount being left for emergencies. 



METHODS OF INCREASING BUSINESS. 



311 



Too much must not be expected in the way of immediate results; and, 
indeed^ although effort should be made to form an estimate of the 
amount of business that comes through the advertising, it must be recog- 
nized that it is utterly impossible to weigh such results with exactness. 

The plans should provide for advertising that is continuous and per- 
sistent, remembering that it is constant dropping that wears away stone, 
and persistent advertising that brings business. Little result is to be 
expected from spasmodic and irregular advertising; it lacks in force and 
in cumulative effect. Continuous and systematic publicity stamps upon 
the minds of the public the name of the company and the inducements 
which it offers. The man who sees, the advertisement of a given trust 
company daily comes to feel that he is acquainted with it and knows its 
strength and facilities. Another thing that argues for having advertise- 



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Fig. 285. 



ments always before the public is the fact that people are earning money 
every day, and either saving or spending it. 

There is an advantage in adopting a suitable emblem, analogous to 
a trademark, to appear in all the company's advertising, including news- 
paper and magazine advertisements, circulars and stationery. Such 
emblems are in use, with marked success, by a number of prominent banks 
and trust companies. The emblem may be a neat picture of the com- 
pany's building, a distinctive style of type, a simple design suggesting 
the name or location of the company; or it may be an attractive design 
selected arbitrarily. Its use tends to give individuality to the advertising 
and to familiarize readers with the advertiser's name and business. In 
the use of emblems, however, care should be used lest all advertisements 
appear too much alike, thus causing the reader to pass them by with the 
idea that he has already read them. 

It should be a part of the plan to use only good qualities in everything 
— paper, printing, illustrations, etc. A circular well printed on good 



312 TRUST COMPANIES. 

paper costs no more for postage if sent by mail than a cheap circular; 
while its possibilities for good are immeasurably greater. The public 
instinctively associates cheap advertising with second-rate concerns. 

Mediums of Advertising. 

An important part of the plan of campaign is the selection of 

mediums. Nothing illustrates more forcibly the change that has taken 

place in the matter of financial advertising than the number of different 

mediums, good and bad, which are to-day used for advertising banks and 

trust companies. Among them are: 

Newspapers, daily and weekly. 

Magazines and illustrated weeklies. 

Financial periodicals. 

Circulars, booklets, statements, cards, monthly papers. 

Pay-roll envelopes. 

Personal and form letters. 

Cards in street-cars and suburban cars. 

Window exhibits. 

Signs, electric and other, on the building. 

Bill-boards and other forms of out-door advertisements. 

Calendars, blotters, wallets and other novelties and souvenirs. 

Newspapers. 

Experts in financial advertising seem practically agreed that for local 
business the daily newspaper (or the weekly newspaper in small towns 
having no daily) is the best single medium of advertising, because it 
reaches more people at a less cost per capita than any other medium, and 
because it is the place that people expect to find the advertisements of all 
live concerns. They are also agreed that newspaper advertisements must 
be supplemented by circulars and booklets. As to the proper propor- 
tions of the two mediums opinion is not so unanimous, and the question 
is largely affected by local conditions. 

In cities where there are several daily papers, it is important to select 
the right Ones. The important considerations are, a wide circulation and 
the reaching of the class or classes of people from whom business is 
desired. Frequently it is wise to use all of the local papers. As between 
morning and evening papers, the latter have the advantage of being more 
apt to be taken home and to be read by all members of the family. Oft- 
times it is useful to advertise in papers published in German or other 
foreign language, being careful to have the advertisement written in 
the same language as the reading matter of the paper. 

The frequency of the advertisements in each paper will depend largely 
upon the number of papers used. A common practice is to have the 
advertisement appear two or three times a week in each paper. The 
space used is generally two, three or four inches, although much larger 
spaces are occasionally employed. 

Circulars and Booklets. 
Circulars and descriptive booklets are being issued in great profusion 
by trust companies all over the country. Their usefulness is unques- 



METHODS OF INCREASING BUSINESS. 313 

tioned, but its degree depends upon several things, among them being the 
familiarity which the people have with such literature. It is evident, for 
instance, that a given booklet will attract more attention in communi- 
ties where such things are novelties than it will where every trust com- 
pany has been issuing them for years. In the latter case, the law of the 
survival of the fittest is more in evidence. 

It is customary to have one booklet treating briefly of all the depart- 
ments of the company, and one booklet on 'each of the departments- - 
banking, savings, trust, safe deposit, bond, foreign exchange, real estate, 
etc. In addition, circulars are often prepared, each of which treats of 
some one function, or one aspect of a function, of the company; e. g., 
trustee, executor or administrator, guardian, agent, registrar, collections, 
wills, management of real estate, savings accounts, checking accounts, 
safe deposit, storage of silverware, storage of furs, letters of credit, 
interest on accounts. Educative ideas like the value of the habit of saving 
furnish the subjects of many little booklets. Circulars are issued directed 
to special classes of people — young men, teachers, firemen, policemen, 
farmers, actors, married women, working girls, foreigners — circulars for 
the last-named being written in various foreign languages. Many com- 
panies, particularly in towns and smaller cities, find it useful to publish 
a little monthly paper, distributed gratis, containing such general matter 
as will interest the readers together with educational and direct advertise- 
ments. Most companies publish in circular form their regular 
statements as called for, but comparatively few get full advertising value 
from them. The ordinary bank or trust company statement has no mean- 
ing to the lay reader, and therefore no interest. But if the statement be 
explained and put in plain English, excluding technical terms, it may be 
made a valuable advertising medium. 

Important results have been obtained from pay-roll envelopes fur- 
nished free to large employers of labor, having printed on their face a 
few well-chosen words on the value of systematically saving a part of 
one's salary or wages and depositing it in the Blank Trust Company. 
One large savings bank uses over two millions of such envelopes each 
year, and iinds it a good investment. 

There are numerous ways in which circulars and booklets may be 
distributed. The most common ways are by sending them to persons on 
the mailing lists and by placing them on the desks and in racks in the 
office so that people may help themselves. For the purpose of mailing 
it is well to remember to have the booklets of a size and weight that will 
permit their being placed, perhaps with a letter, in an ordinary size 
envelope, and carried for one stamp. Mailing cards are coming to be 
used for this purpose. 

A little thought will suggest other ways in which the circulars may 
be distributed. The officers and clerks may carry a small supply in their 
pockets and hand them out as favorable opportunity occurs. They may 
be mailed with interest notices, with notices of safe deposit rent due, 
with notices to send in pass-books for entry of interest. When pass- 

21 



314 TRUST COMPANIES. 

books are balanced and ready for delivery, there is an excellent oppor- 
tunity to enclose in the book a neatly printed slip calling attention to 
the fact that the company is making every effort to render good service, 
asking for criticisms if the service has been in any way unsatisfactory, 
and inviting the customer to bring in his friends. 

Magazines, Etc. 

Magazines, illustrated weeklies and other periodicals whose circula- 
tion is general, not local, are used when a banking-by-mail business is 
sought. In this field the selection of mediums is of supreme importance, 
and the advertising manager needs to thoroughly inform himself as to 
the bona fide circulation of each periodical considered, the classes of 
people it reaches, and the localities in which its circulation is greatest. 
The opportunity is large to waste money by placing advertisements in 
mediums that do not circulate among the people wanted. 

Financial Periodicals. 

Financial periodicals are the mediums employed when advertising 
specially for accounts of banks and other trust companies. 

Letters. 

Personal letters, and form letters which are written as personal let- 
ters, are being widely used, and when intelligently written and handled 
prove a very valuable advertising medium. They are sent to persons ol 
the regular advertising lists and to selected lists made up from time to 
time. For instance, brief letters showing the value of opening savings 
accounts for the children in the family may be sent to parents of new- 
born babies, the names being obtained from the birth lists. The subjects 
treated in the letters may be the same as those covered in booklets, but 
are treated briefly and in letter style. Some of the letters are direct 
invitations to open accounts. The "follow-up" system is generally used; 
i. e., new letters are sent out at regular intervals until the "prospect" 
becomes a customer or is evidently not to be reached by this method of 
advertising. 

The plan being that these letters should partake of the character of 
personal letters, care must be taken to adhere to the plan in every 
respect. The best way is to have each letter written separately by a 
corps of typewriter operators. If this is impracticable, the letters should 
be printed by a printer who makes a specialty of such work and under- 
stands his business. Carbon copies or poorly mimeographed copies should 
never be used. The letters should be personally signed in ink by an 
officer of the company, rubber stamp signatures being avoided. They 
should be sent out as first-class mail matter. Unless these precautions 
are taken, it is better to have the letters printed as circulars without any 
pretence of being personal letters. Such circulars will have a better 
effect than "personal" letters which proclaim upon their faces that they 
are not what they pretend to be. 



METHODS OF INCREASING BUSINESS. 315 

Other Mediums of Publicity. 

Advertising cards in street cars are extensively used in most cities. 
They offer space for only a brief message or reminder; but they are 
before the eyes of people who usually have nothing to do except to read 
such cards. Even the man who makes it a habit to read his paper or a 
book on the car has times when he has finished his reading or wearies of 
it, and lets his eyes glance at the advertising cards. Care must be taken 
to have the type used in these cards large and plain enough to be read 
with ease. It is to be observed that this medium of advertising reaches 
only those who use the cars, and is available mainly in cold weather 
when closed cars are in use. Care should be taken to select car lines 
patronized by persons who would find the office of the advertiser con- 
venient. Copy for these cards must be changed frequently. 

Window exhibits are used by many companies. They may consist of 
collections of coins or currency, a check or draft of unusual amount, a 
picture or model of the company's new building, the last statement of the 
company, especially if explained in detail, a comparative statement show- 
ing growth, an enlarged photographic reproduction of a savings pass- 
book showing how an account increases by persistent saving, etc. One 
attractive exhibit was made of an hour-glass accompanied by a statement 
of the amount of interest earned by savings depositors during the hour 
required for the sand to run out of the upper half. Care must be taken 
to have such displays not too sensational. It is to be noted, too, that 
some companies are so located that it might bring danger of a "run" 
to have a crowd gather about the window. 

The signs on the building occupied by the company should be distinct 
enough so that an ignorant person looking for the office will have no 
difficulty in finding it. There is also a value in signs conspicuous enough 
to attract attention of the general public, provided a reasonable amount 
of dignity is maintained. In some cities electric signs at night are used. 

Calendars, blotters, wallets, rulers and various novelties are exten- 
sively used, although their value is questioned by many advertising man- 
agers. It sometimes happens that even when the advertising value of 
such things is known to be small, it is advisable to invest in them in order 
to retain good will or to follow a custom established in a community, the 
failure to follow which by any one company would hurt its business. 
Companies located in small cities or towns or in the outskirts or small 
business centers of cities doubtless are under a greater necessity of 
using this kind of advertising matter than are the large companies at 
the business centers of the principal cities. 

In common with other concerns, trust companies are continually 
asked to buy advertising space in programmes, cook-books, monthly 
church or lodge papers and other printed matter issued by churches, clubs, 
societies, etc. The opinion seems to be pretty general and pretty definite 
that such things are practically worthless as advertising mediums. It is 
nevertheless often advisable, if not necessary, to take space in such pub- 



316 TRUST COMPANIES. 

lications, not as real advertising, but as a gift to gain or keep the good 
will of the persons interested. 

Personal Efforts by Officers, Stockholders and Others. 

Besides advertising in the more technical and restricted sense, there 
are many other means through which a company may make itself well 
and favorably known to possible patrons. The first of these is the oldest, 
and at one time practically the only, means of publicity — through the 
personal efforts of the officers. This is still one of the important means. 
Through membership *in clubs, societies, churches and participation in 
other business enterprises, the trust company officer has splendid oppor- 
tunities of bringing business — opportunities which are fruitful, other 
things equal, in proportion to his personal popularity, ability and reputa- 
tion for integrity. 

In some parts of the country, special solicitors have been employed to 
bring in new accounts. They are usually given an official title for the 
sake of having a better standing in approaching people. Their task is 
one requiring great skill and care. 

The directors ought to be the source of much new business. They 
should be kept in touch with the progress of the company, with its plans 
and prospects, the lines of work it is undertaking, and be filled so full 
of information and enthusiasm that they can and will tell their friends 
about it. Men should be elected to the directorate who will give to their 
duties enough time and attention to keep informed as to what is going 
on, and who have enough interest in the company to use every oppor- 
tunity to build up its business. 

By properly directed efforts the stockholders may be made an import 
ant means of building up the business. Some companies have built up a 
large line of business simply by interesting the stockholders in the work. 
They really "have important reasons for maintaining an active interest 
in the company's affairs, and but little effort is needed to arouse such 
interest and make it result in new business for the company. The essen- 
tial thing is to keep in constant touch with them, by letters, personal 
interviews, frequent meetings, providing them with samples of all import- 
ant advertising matter, and treating them as partners in the enterprise 
rather than as outsiders having no interest other than the semi-annual 
receiving of dividends and the annual sending of proxies. One enter- 
prising bank president got his stockholders together every three months 
for a smoker — and the business showed the results. 

Many depositors (assuming that they are well treated) will be found 
ready to help in building up the business, if they are asked to do so. An 
excellent custom is in vogue among some companies, of writing a personal 
letter, signed by the executive officer, to each new depositor, thanking 
him for his account, assuring him of the desire to render efficient service, 
and expressing a hope that the new relations may be profitable and last- 
ing. This makes the depositor feel welcome, but must be backed up, of 
course, by courteous personal treatment. From time to time means should 



METHODS OF INCREASING BUSINESS. 317 

be devised of keeping in touch with all depositors, to make them fee] 
that they are appreciated and wanted. The trust company has an oppor- 
tunity, if it will use it, to build up each department from among the 
customers of the other departments, by seeing that they are posted as t:> 
all the services the company can render them. 

The various employes of the company have friends and acquaintances 
from whom they could get accounts, if encouraged to do so. Some com- 
panies offer prizes each year to employes for new business obtained. 

Results of Audits and' Examinations. 

Audits offer opportunities for effective advertising that should be 
utilized. When a thorough audit of a trust company has been made by 
a responsible audit concern, and matters found in good condition, every 
reasonable means of advertising the fact should be employed; for it 
has a very strong tendency to prove to the public mind that the company 
is solid and trustworthy. If a good auditing department is maintained, 
the fact should be advertised. 

Treatment of Customers. 

Without doubt the most effective means of building up a trust com- 
pany's business is found in fair and courteous treatment of all persona 
with whom the company has any dealings. Without it, no amount of 
advertising or of personal solicitation will avail to greatly increase the 
number of customers. The best of all advertisements is a pleased cus- 
tomer; a customer pleased not because he has "worked" the company for 
special accommodations, but because he has been treated with uniform 
courtesy and fairness and his business has been cared for with prompt- 
ness, intelligence and accuracy. He is almost certain to bring his friends 
to the institution which has rendered him such services, and may be relied 
upon as a life-long customer, and a patron of all the departments. Cour- 
tesy and efficient service must be the cardinal principles governing the 
administration of the trust company that would build up and maintain; 
an ever-increasing business. With these principles the whole office force 
must be imbued; for in their practice every employe from office-boy to 
president must co-operate. Grouchy and unaccommodating tellers, book- 
keepers and clerks may easily drive away more business than the adver- 
tising department, officers and directors can bring. The whole atmosphere 
of the offices must be filled with the spirit of welcome and cheerfulness'. 

Office Equipment. 

This spirit is expressible not only in the personal attitude of the 
officers and employes, but also in the furnishing and equipment of the 
offices. These should be attractive and cheerful, containing conveniences 
of various kinds for customers. The most up-to-date offices provide 
couches, writing tables, telephones, reading matter and other facilities 
especially for customers. A ladies' department is maintained, frequently 
in charge of a matron who looks after the wants of women customers. 



318 TRUST COMPANIES. 

New currency is paid out by the tellers. An excellent plan is to have aa 
official in the lobby with no other duties than to look after the interests 
of customers, answer questions, direct people to the proper windows. 
Nothing is so disagreeable, especially to a timid person, as to be sent from 
window to window to find the proper place to transact his business. 

Increasing Trust Department Business. 

While the methods already described will in course of time build up 
the business of the trust department along with that of the balance of 
the institution, it is of course desirable to make special effort to in- 
crease the patronage of this department. The greater part of its busi- 
ness will come from satisfied customers of other departments ; and little 
progress can be made in securing trust business until the company has 
established a reputation for solidity and for skill in the handling of 
business. These two things are the most forceful arguments for the 
selection of the trust company to handle fiduciary business, and the com- 
pany which is seeking such business must be prepared to show that it 
excels in these particulars. 

In seeking business of a fiduciary character, it is essential to bear 
in mind that this is the part of the trust companj^'s functions which is 
least understood by the general public. The time will doubtless come 
when the usual practice, both among persons of large means and per- 
sons of small means, will be to use the trust company as executor of their 
wills, trustee of their estates, etc.; but at present the custom is to use 
the services of individuals for such purposes. Those who are thoroughly 
informed on the subject understand the great superiority of the trust 
company for such duties ; but such people are decidedly in the minority, 
and most persons either do not know that the trust company is em- 
powered and equipped to do the work, or else do not know that they 
have any better facilities for its performance than have individuals. The 
chief problem before this department, therefore, is the education of the 
public on the functions of the trust company and on its special qualifica- 
tions for the exercise of those functions. In some cases the educative 
work must go still further, as, for example, in teaching the importance 
of making a will now or else of providing for the distribution of one's 
estate by the creation of trust funds before death. 

As a preliminary step, attractive circulars should be printed which 
describe the work of the department. There should be one circular 
stating briefly but clearly all of the various duties which the department 
is authorized and prepared to undertake. This should be supplemented 
by separate booklets, each of which treats more fully of a particular 
function, such as acting as executor, or guardian, or trustee. These cir- 
culars may be mailed to selected lists of people, may be placed in racks 
prominently located in the company's offices, and may be given out per- 
sonally to individuals who ask for information or who are known to be 
interested. When a person asks about any of these functions, he or she 



METHODS OF INCREASING BUSINESS. 319 

should be introduced to the trust officer, who should take the time to 
thoroughly explain the advantages offered by the company. 

A proper proportion of the newspaper advertisements of the com- 
pany should be devoted to the work of the trust department, and be 
educative in character. In all advertising devoted to this department, 
it should be shown that the charges made by the trust company do not 
exceed those made by individuals, and are often smaller. Unless this 
is done, the claims made for superiority of services and security may 
lead to the impression that the fees are correspondingly higher. 

For tlie reason already suggested, that the performance of fiduciary 
work bv other than natural persons is in most communities a new thing, 
special imjjortance is attached to getting a start in such business. No 
one thing will so influence the people of a community towards using the 
trust company for such duties as the knowledge that some of their 
prominent fellow citizens are already doing so. It is therefore of prime 
importance to thoroughly — but wisely and carefully — advertise the fact 
when an important trust has been handled. This can be done in news 
items as well as by paid advertisements. If, for example, The Blank 
Trust Company is acting as assignee of Doe and Roe, the public is in- 
terested in the progress of the work, and the press will be glad to have 
frequent news items regarding it. Such publicity will impress upon the 
minds of the public the fact that trust companies, and The Blank Trust 
Company in particular, act as assignees. So if John Smith has ap- 
pointed The Blank Trust Company executor of his will, the more widely 
the fact is known the better. The fact that the late Marshall Field of 
Chicago chose trust companies as executors of his will and custodians of 
the vast funds left by him. in trust, weighs more with most people than 
any number of arguments on the subject. 

A natural source of trust work at the beginning is from the di- 
rectors and stockholders of the company. Some of them can be ap- 
proached on the subject directly; others can be influenced indirectly by 
filling them with information on the subject and setting them to work 
to interest others, — a process which will readily suggest to them that 
they might themselves make use of the trust department. While from 
one point of view trusts so received are not as good for advertising 
purposes as those received from outsiders, they carry much weight as 
evidences that the directors of the company display absolute confidence 
in the solidity and facilities of their own institution, about which it is 
presumed they have inside information. 

In many communities it is feasible to have published in the local 
papers, Sunday or other, "feature" articles treating of the progress of 
the trust company as a quasi-public institution, and explaining its work 
and the advantages which it offers. 

Most companies make a practice of preparing wills free of charge 
in cases where they are made executors of same. An advertisement on 
the subject gives a good chance to discuss the importance of making 



320 TRUST COMPANIES. 

wills, arid to call attention to the fact that the company acts as executor 
and trustee. 

It is of great importance to cultivate the friendship of the legal 
fraternity. While it is true that the trust company is gaining some of 
the business that has been handled largely by members of the bar, it is 
true on the other hand that they must and do employ legal counsel them- 
selves and are creating business for lawyers. The amount of competition 
between the two, both present and prospective, has been greatly over- 
estimated in some quarters. The purely legal business taken over has 
simply been transferred from attorneys not connected with the company 
to attorneys in the employ of the companj; while much of the business 
in question is technical and clerical rather than legal, and involves work 
which the lawyer who devotes himself to the practice of his profession 
is often glad to be rid of. Arrangements are often made that the trust 
company administering an estate shall retain the services of the lawyer 
chosen by the family interested in the estate; and it is customary when a 
lawyer brings business to a trust company for the latter to employ him 
as attorney in any matter connected with such business which may re- 
quire special legal services. 

New companies will do well to be patient about the growth of the 
trust department, remembering that its progress is naturally slow, and 
that its business is cumulative, like that of the lawyer or the doctor, — 
the greater the amount of work successfully done the easier it will be 
to obtain new business. It is a matter of building up a reputation, — a 
process which requires time. 

Preparation of Advertising Copy. 

The preparation of copy for the various advertisements requires a 
peculiar skill. Natural qualifications for such work are required as a 
basis, and must be supplemented by careful study of the principles of 
advertising and of the work of the best advertising writers. The work 
can not be done by following fixed rules, but some conclusions drawn 
from the practical experience of advertising men afford useful guides. 

The copy should be adapted to the medium used. Different kinds of 
copy are required for newspaper, magazine, circular and street car adver- 
tisements. The newspaper advertisement will be read by busy people 
and will usually be seen but once, the life of the newspaper being not 
over twenty-four hours. All that can be given is a single impression, 
which should be as strong as possible. The reader must get the impres- 
sion quickly and easily, if at all. The magazine advertisement will be 
read by people having more leisure, and may partake more of the "reason- 
why" style. In the circular or booklet still more detail may be given. A 
card in a street car offers space for a very few words, a single impression ; 
but it may be read a number of times by the same persons. 

The copy should be adapted to the space used. It should never crowd 
the space. 



METHODS OF INCREASING BUSINESS. 321 

The copy should be adapted to the reader. It must be couched in 
words and terms that he understands. If addressed to the busy man, it 
must be brief; he will not read long explanatory matter. But others 
may want to read reasons and arguments, and too great brevity is a 
mistake in advertisements addressed to such persons. Advertisements 
addressed to the general reader must not be so long as to repel the busy 
reader, nor so brief as to be hard to understand. Perhaps the weakest 
point of the average writer of financial advertisements is a failure to 
understand the viewpoint of the general reader and to learn his wants 
and his attitude. The average man does not understand the banking or 
trust company business; it is a mystery to him — simple as it may seem 
to an insider. He would be greatly interested in a magazine or Sunday 
newspaper article explaining the details of the business ii» a frank and 
straightforward manner — written in plain English and not in clearing- 
house phraseology. He would appreciate a booklet from his trust com- 
pany giving such information. 

The wording of the advertisement should have the ring of sincerity, 
honesty, frankness ; and it must be backed up by performance. 

The literary style used in the copy must be interesting, catchy; but 
never witty, frivolous or over-original. Parting with his money or dele- 
gating his business never impresses a man as a humorous procedure; the 
"cute" financial advertiser disgusts him. The sentences should be short, 
crisp, clear; the words good, common short English words, avoiding 
superlatives and technical terms. The test of a good advertisement is 
that it attracts attention, interests and convinces. It must leave the 
reader in a pleasant frame of mind — never scold, preach or antagonize. 

A fundamental principle in copy-writing is to treat one point at a 
time. If the reader digests that one point, the advertisement has been 
a marked success. The next advertisement may add another point. 

The copy should be addressed to just one person — the reader. He 
should be made to feel that his business is wanted. 

The copy for advertisements in periodicals should be changed fre- 
quently; in the newspapers, daily. This holds the interest of readers and 
creates the impression that the company is alive. 

Timeliness is a telling point. Bank-books for Christmas presents 
should not be advertised in July. A robbery offers a splendid oppor- 
tunity for an advertisement on the folly and danger of keeping large 
sums of money in the house or on the person; a fire, for a discussion of 
the advantages offered by the safe deposit department; a defalcation 
by an executor, for a demonstration of the usefulness of the trust com- 
pany in fiduciary capacities. A few live companies produced some telling 
advertisements for their safe deposit departments immediately after the 
San Francisco disaster. 

Of the inducements or talking points available for trust company 
advertisements, the strongest is undoubtedly that of the solidity of the 
company and the security afforded to depositors. No inducements will 
attract people to an institution which they do not believe to be safe. 
Facts tending to show solidity are ample capital and surplus, large 



322 TRUST COMPANIES. 

assets, proportion of assets to liabilities other than capital and surplus, 
careful investments, reserve, well-known and substantial directors, trusts 
from courts, state or municipal deposits, state supervision, an up-to-date 
system of accounting, the confidence of numerous depositors. Frequent 
and thorough audits, either by a regular auditing department or by out 
side audit concerns provide an excellent talking point for solidity. 

Next to safety, ability and desire to give capable service is usually 
the best talking point. A high rate of interest is, as a rule, not a good 
advertising point. There is apt to be a suspicion that the high rate of 
interest is paid at the sacrifice of security. Nevertheless, there are excep- 
tions to the rule. In banking-by-mail business, Pittsburg and Cleveland 
banks have secured large deposits partly because of their four per cent, 
interest rates on savings accounts. Where the interest rate is used as 
an inducement, it is of prime importance to show why it is possible to pay 
such rates without sacrifice of safety. 

Among other inducements which may be made the subjects of adver- 
tisements, are convenience of location, attractive building or offices, special 
conveniences for customers, especially for ladies, advice about business 
matters, opening of the office one evening a week. A series of strong 
advertisements may be written on the different functions of the com- 
pany, treating one at a time. The maxims of Benjamin Franklin and 
others, with brief comments, provide good material for educational pub- 
licity. 

The Typographical Make-up of the Advertisement. 

The typographical make-up of the advertisement should be made the 
subject of careful study, for it largely determines whether the reader 
will notice the advertisement at all. It must be different from the sur- 
rounding matter — set off by itself. On the average page, this may be 
accomplished by means of a suitable border and a white space between 
the border and copy. If the page is pretty well filled with bordered 
advertisements, however, more individuality and distinctiveness will be 
obtained without the border. As a rule, there should be a caption or 
catch-line which stands out distinctly, to appeal to interest or curiosity. 
The face and size of type for use in the caption and in the body matter 
as well as the border and general make-up, should be dictated by the 
advertiser, and the proof should be seen and corrected. It is wise to 
allow the printer ample time. The advertisement should have a good 
position on a page apt to be read by the people whom it is desired to 
reach. It should be given plenty of room; if the copy crowds the space, 
the latter should be increased or the copy be rewritten. It is economy to 
pay for enough blank space to give a good setting. 

There is an advantage in always using a distinctive style of type or 
border or an emblem — something which will readily give individuality tc 
all of the company's announcements. To insure getting just the make-up 
that is desired many companies use electrotypes which they own and dis- 
tribute to the papers as needed. The cost is slight and no chances are 
taken of poor judgment or serious errors. 



CHAPTER XIII. 

EXAMINATIONS, AUDITS AND OTHER MEANS OF SAFE- 
GUARDING THE BUSINESS. 

FORTUNATELY, the tendency of the day is toward the surround- 
ing of the trust company business with every reasonable safe- 
guard. This tendency is due not only to the increasing public 
demand for such safeguards, but also to a truer appreciation on the 
part of directors and officers of the sacredness of their trust, and to 
the realization that it is good business policy to use every means of 
inspiring confidence in institutions whose success is built upon confidence 
as a corner-stone. For the safeguarding of the business of trust compa- 
nies every argument applies that has force in the case of banks, and addi- 
tional arguments are found in the wider scope of the business and in 
the increasingly important trusts that are committed to their care. 

The parties interested in the matter include the general public, the 
stockholders, and the employees. Of the general public,, the depositors 
and the beneficiaries of the trusts are of course most directly interested; 
but inasmuch as trust companies constitute an important part of our 
financial system, and because the failure of such a company vitally 
affects the interests of many persons who have had no direct dealings 
with it, all the people have a right to demand that in the conduct of the 
business reasonable precautions be adopted. The stockholders have 
their money invested in the company and are the first to suffer in case of 
failure ; they have valid reasons for requiring satisfactory protection 
of their interests. The employees, including the officers, are entitled to 
every possible protection against excessive temptation. 

Aside from the restrictions and limitations upon the business imposed 
by the laws under which trust companies operate, the possible safe- 
guards include examinations, audits, care in the selection of officers and 
other employees, and the adoption of an accounting and administrative 
system which leaves the fewest possible loopholes for dishonesty or 
bungling management. 

Accounting and Administration. 

Of these a well-considered and carefully planned system of account- 
ing and of administration is fundamental. Recent years have seen great 
progress in this respect, but there is room for much more. Many com- 
panies are still using systems which invite error, mismanagement and 
fraud; and doubtless some will continue to use them until failure comes 
or until a competent accountant or auditor is employed who shall point, 
out the weak places. Among recent cases of banks and trust companies 
ruined by defalcations have been several in which stealings of hundreds 

323 



324 TRUST COMPANIES. 

of thousands of dollars had been going on for a series of years ! A 
small trust company was robbed of several thousand dollars by an 
employee who had for some time acted both as savings teller and as 
savings bookkeeper ! In such cases one hardly knows whom to blame 
most, the defaulting employee or the officials responsible for the lack of 
intelligent system. It is true that no system can be devised which will 
absolutely prevent blunders on the part of careless or incompetent work- 
ers, or stealings on the part of dishonest ones ; but it is entirely practi- 
cable to perfect systems which will reduce such possibilities to a minimum. 

Such a system having been adopted and put into operation, the next 
essential is to see that it is carried out faithfully, and that nothing that 
smacks of habitual carelessness, mismanagement or dishonesty exists. 
This can be accomplished only by means of examinations and audits, 
regarding which a considerable change of sentiment has taken place dur- 
ing recent years. The old-time banker looked upon it as something of 
an insult to suggest that his work ought to be checked over or examined, 
feeling that the dignity of his trust ought to place him above suspicion. 
The modern view is such that the most progressive bank and trust com- 
pany officials welcome thorough and intelligent audits, believing that 
the careful and conscientious man has nothing to lose and much to gain 
by having the fidelity of his administration proved beyond question. It 
is a frequent practice to voluntarily employ public accountants to make 
thorough audits. 

So far as the audit is designed to detect crime, it is not a reflection 
upon the honesty of the average officer or clerk — which is, indeed, as- 
sumed — but rather a recognition of the fact that occasionally a dis- 
honest man may creep in and destroy the work of the honest majority* 
and from this viewpoint the audit is a protection to the faithful ones. 
At any rate, the public is no longer disposed to accept from the directors 
of financial institutions which fail the excuse that "they didn't know 
there was anything wrongs and supposed the officers and clerks were 
honest," and is coming more and more to hold such directors both mor- 
ally and legally responsible for such knowledge. The public is right 
about it, too; there is no excuse for slipshod methods and guesswork in 
the business of the trust company, and men who are not willing to attend 
to their business have no place upon the board of directors of such a 
corporation. 

It is to be observed further that the detection of crime is by no means 
the only object of examination and audit. Still more important is the 
prevention of crime, which systematic auditing accomplishes in two 
ways — by the discovery of stealing at its beginning, when the amount 
is almost invariably small, and by the deterrent effect which is inevitable 
when officers and employees understand that speedy detection is practi- 
cally certain if anything wrong is attempted. Indeed, the very sugges- 
tion of stealing comes to most men only when the conditions seem to 
make it easy and comparatively safe. Another exceedingly important 
purpose of a proper audit lies in criticism and suggestion regarding the 



EXAMINATIONS, AUDITS, ETC. 823 

system of accounting and general administration, the pointing out of loop- 
holes for error or dishonesty and the enforcing of faithful adherence to 
the system in use. 

Examinations by officials representing the state government are 
required in many states, and ought to be in all. State laws sometimes 
require also examinations by committees of the boards of directors; and 
whether required by the state or not, such examinations are usually pro- 
vided for in the by-laws of trust companies. Examinations are also 
made in some companies by committees of stockholders who are not mem- 
bers of the board of directors, while a few companies have resorted to 
examinations of each department by employees of other departments. 
Among the larger companies the habit is growing of maintaining a 
special auditing department; while instead of this, or in addition to 
it, many companies have an annual or semi-annual audit bj a public 
auditing concern. 

The examinations conducted under the authority of the state are 
intended primarily to see that the company is conducting its business 
in accordance with the laws of the state; and while their purpose is 
attained more or less completely, according to the thoroughness of the 
officials who do the work and the time at their disposal, such examina- 
tions are rarely thorough enough to detect any but the most bungling 
attempts at stealing, while suggestions regarding the system of account- 
ing are wholly without their province. 

Examinations by committees of directors are as a rule very super- 
ficial and unsatisfactory, while many are mere farces. In the cases 
of "one-man companies" — that is, companies in which the executive 
officer is relied upon to manage the company practically alone, without 
advice or investigation by the directors, these examinations are apt to 
be exceptionally farcical; and this in spite of the fact that these are the 
companies which specially need thorough and frequent examination. 
The reasons for the incompleteness of directors' examinations are found 
partly in the common disposition to regard the director's office as a badge 
of honor rather than as an avenue of service, and partly in the fact 
that the men chosen for such positions are usually men whose time is 
very fully occupied with their own affairs and who often are urged to 
accept the position against their wills and better judgment. Nor are 
the men composing these committees as a rule familiar with the details or 
even the principles of trust company accounting. The time given to the 
examination by such committees does not average over a day or a half 
day. It is evident that such examinations can hardly be deemed satis- 
factory as evidences of the sound condition of the company. 

Nevertheless, the writer does not want to be understood as holding 
the opinion that the ordinary examination by a committee of directors is 
wholly useless. Failures often occur because of unsound or excessive 
loans or investments, and if the directors are not already aware of such 
conditions in their company — as they should be — even a cursory exam- 



326 TRUST COMPANIES. 

ination may open their eyes, unless there is intentional dishonesty and 
concealment on the part of the officers. If the committee insists upon 
actually seeing and handling all securities and the notes for all loans, 
it will at least have proved that the assets called for by the books are 
in the company's possession at the moment; while it will also have an 
opportunity to observe what names of officers or directors appear as 
makers or indorsers on the notes. This is of some value, though of 
course it gives no assurance that the books are correct, nor would it 
detect anything that would even create suspicion against an ordinarily 
shrewd officer who was engaged in looting the institution. There is also 
some advantage in the insight into the company's affairs which the com- 
mittee may gain, and in the interest which may be awakened in them. 

But a directors' committee examination may easily be made, and 
sometimes is made, of considerable value, if men are selected who are 
willing to give several days to the task and who have some technical 
knowledge which qualifies them for the work. The committee may then 
make some general examination of the books, examine and list all of 
the assets called for, with their appraisal of same, make note of items 
that are worthless or unmarketable or of uncertain value, point out 
serious flaws and tabulate loans and investments in which officers or 
directors are interested, giving names and amounts for each. Such a 
committee should not include any members of the executive committee 
or any of the officers, and should work independently of the latter. 

An examination by a committee of stockholders who are not direc- 
tors may accomplish much good, provided, as in the case of the directors' 
committee, men of ability who will take the necessary time are found. 
Its work may well proceed along the lines just indicated, going further 
if possible. Such an examination has an advantage in that it is con- 
ducted by men who are not directly responsible for the policy that has 
been pursued. 

Examinations by committees of employees are practicable only ir. 
companies having several departments. They may be made of some 
value as examinations and of much value in the way of education and 
increased interest among the men who do the work; but are evidently 
subject to the important objection that they are not apt to affect the 
work of officers; while, as the work must be done "out of hours," they 
impose a burden upon the men which is hardly justifiable. 

That the insufficiency of the different kinds of examinations just 
named is coming to be widely recognized is shown by the steadily increas- 
ing number of companies which either maintain a special auditing 
department or employ outside auditors or accounting firms to make 
thorough examinations of their work, some companies having even adopt- 
ed both plans. It is only by such means that anything like a satisfactory 
examination can be made, particularly of the larger institutions. The 
wonder is that the fact has been so long unrecognized, and that other 
corporations have preceded banks and trust companies in the adoption 
of thorough auditing systems. 



EXAMINATIONS, AUDITS, ETC. 327 

As between the maintenance of an auditing department and the 
employing of an outside accounting firm for the examination of the 
larger trust companies, not enough experience has been gained to deter- 
mine which is the better plan, and opinions naturally differ. If, as 
some large companies have found to be the case, under either plan it 
is necessary to have a permanent force engaged in auditing throughout 
the year, the choice is largely one of form, except perhaps as to cost. 
Of course, the smaller companies do not oiler work enough for a per- 
manent auditor, unless he puts in some of his time at other duties, in 
which case his value as an auditor is slight. Such companies should 
employ a competent and responsible accountant to put in such time as 
is necessary for the work. He should make complete audits at intervals 
of six months or a year, and in addition step in without previous notice 
to make special examinations. His reports should be rendered to the 
board of directors in person, and never to an officer of the company; 
and the stockholders are entitled to an annual report giving at least his 
general conclusions. 

Whether an employee of an accounting firm or of the audit depart- 
ment of the trust company, the auditor in charge should be a man who 
thoroughly understands both the science of accounting and the busi- 
ness of the trust company. He must possess courage and force of char- 
acter, be not over-trusting or over-suspicious, and be endowed with more 
than the average amount of tact. If he has assistants, as he must in 
examining the larger companies, they should also be selected with a 
view to their fitness for this particular work. 

The Audit Department. 

In 1903 a committee appointed by the Trust Company Section of the 
American Bankers' Association reported to that body, that while excel- 
lent systems of auditing were in use, there were but few companies whicn 
had established regular audit departments. Since that time the organiza- 
tion of such departments has been quite rapid, but as is natural in a 
new department, there is little uniformity in its conduct among different 
companies. In some cases a department is organized with an auditor and 
a number of assistants; in others, there is a single official known as the 
auditor, or the controller, who in addition to the duties of auditor acts 
as chief of the clerical force or performs other duties. In such cases 
his work is usually supplemented by the periodical employment of 
an audit company. 

In the selection of an auditor favoritism should have no place. He 
should be appointed, not by an officer, but by the board of directors, 
and to them and them only, in regular session, should he make his 
reports. His work is quite as much a check upon the officers as upon 
the clerks, and for that reason it is manifest that he should not be in 
any way dependent upon the officers. For a similar reason his appoint- 
ment should not be dictated by the executive committee alone, but by the 
full board of directors, and he should report also to the stockholders. 



328 TRUST COMPANIES. 

As already indicated, an important part of the duty of the auditor 
is to devise or to perfect the system of the institution with the special 
purpose of guarding against carelessness or dishonesty. He will, for 
example, see that the officers or tellers who are authorized to sign or 
countersign drafts do not have also the right to make entries in the 
books; that the same employee does not both handle cash or securities 
and keep the books; that where there is opportunity of collusion between 
tellers and bookkeepers, the latter are frequently shifted to other sets 
of books without previous notice; that the work is so subdivided that 
no one man can carry through all the details of any transaction. 

The exact methods followed in the work of auditing must depend 
upon the conditions existing in each institution, and it is impossible to 
devise a s^^stem which will be applicable to all companies. An attempt 
to do this was made by a committee appointed by the Trust Company 
Section of the American Bankers' Association, which reported in 1903; 
but the committee reached the conclusion that a system applicable to 
all trust companies was out of the question. The report of the com- 
mittee, however, and the three papers on the subject contributed by 
prominent trust company auditors, contain many valuable and practical 
suggestions. 75 

The Selection and Treatment of Employees. 

The success of many men prominent in the business world has been 
ascribed to their sagacity in the selection of the men who worked for 
and with them. The success of a trust company is often materially 
affected by the kind of judgment used in the selection and training of 
its employees as well as of its officers. The company whose entire work- 
ing force, from officers down to errand boys, is uniformly courteous, 
obliging, accurate and capable, has a tremendous advantage over a com- 
pany whose officers have these qualities, but some of whose employees 
are impolite, unaccommodating or prone to numerous errors. 

It is not always an easy matter, particularly in the larger companies 
where changes of employees are frequent and must often be made in 
a hurry, to find just the right person when a vacancy occurs. For this 
reason, if for no other, the officer in charge of the employment of the 
clerical force will do wisely to look up available timber before the 
moment it is needed, and always have on file information regarding a 
number of applicants whose record he has taken pains to learn. Most 
companies have more applications for positions than they have places 
to fill. Unless something appears at once that shows the applicant to 
be undesirable, he (or she) should be requested to write a letter of 
application stating his age, education, experience, present occupation 
reason for proposed change, references, etc. It has been found useful 
to file such applications, together with other letters or memoranda relat- 
ing to the applicant, in a specially printed envelope, represented in Figure 
286. These envelopes may be filed alphabetically or grouped according to 



75 See Proceedings Trust Company Section American Bankers' Association, 
1903, pp. 12-25. 



EXAMINATIONS, AUDITS, ETC. 329 

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REASON FOR LEAVING . 



(3) WITH - , 

CLASS OF WORK — PER MO. $ 

REASON FOR LEAVING . — 



REMARKS 



Fig. 286. — Application Envelope. 

22 



330 TRUST COMPANIES. 

positions for which the applicants are qualified. The officer notes upon 
the envelope the personal apearance of the applicant, and adds further 
data obtained by correspondence with references given; so that after a 
personal interview he is usually able to form a pretty definite idea as 
to whether the candidate is worth placing in the eligible list. If the 
system is faithfully followed, there will usually be on hand applications 
from persons about whom the officer in charge has some knowledge, and 
who will be available when a vacancy occurs. 

Of the qualifications required in an applicant who is to be considered 
favorably, honesty is the fundamental thing. The writer is aware that 
the remark is trite, but believes that there is as much appropriateness in 
the remark now as there ever was. The restless and hurry-to-get-rich 
disposition of the average American of to-day can not be seasoned too 
much with the good, old-fashioned virtue of absolute integrity; and cer- 
tainly the premium on that virtue should nowhere be greater than in the 
trust company. Next to honesty and general good character, education 
is important. Boys who have not finished the grammar school are con- 
tinually applying for positions. Girls who have taken courses in stenog- 
raphy before they have learned to spell or to begin a sentence with a 
capital letter, want to become bank stenographers. Due consideration 
should be given to cases in which circumstances make it impossible for 
the applicant to continue at school ; but as a rule the welfare of the 
applicant and of the company alike demand that boys and girls who 
have not had at least a high school education be discouraged from seek- 
ing permanent positions with trust companies. Particularly is this the 
case in companies whose aim is to develop men for its higher clerical or 
official positions from the ranks. In common with the business of the 
banks, the business of the trust company is in a state of evolution. 
Civilization is growing more complex, and the United States has taken 
its place among the "first powers" of the world, and the business of the 
trust company is coming to require more highly trained minds and a 
broader outlook. Undoubtedly the best material for trust company work, 
other things being equal, is found in the man with college training, pro 
vided, of course, he has used his opportunities and not merely "been to 
college." His mind is better trained, his outlook is broader, he puts 
more intelligence into his work, and he does not so soon reach the limit 
of his capacity. 

The qualities which go to make up an attractive personality are next 
in importance — neatness in person and in dress, a cheerful disposition, 
and a courteous and friendly manner. Ordinary ability and willingness 
to work are of course assumed. If the position to be filled is advanced, 
previous technical experience is of course necessary; but in ordinary 
cases the man with the qualifications just named will pick up the tech- 
nical knowledge and in a few months be of more value to the company 
than the experienced man who has not these qualifications. 

In the matter of promotions civil service rules should be, and hap- 
pily in most companies are, in force. "Influence" is coming to have 



EXAMINATIONS, AUDITS, ETC. 331 

less and less power in the matter, and should have none. The filling of 
vacancies in the higher positions by promotion from the ranks when 
possible is demanded alike by justice to the employee and by the best 
interests of the companj^, for no one thing so tends to maintain a loyal 
spirit among the employees as the knowledge that a "square deal" in 
this matter is assured. This does not mean that every employee should 
be "moved up one peg" every time a vacancy occurs in one of the higher 
clerkships; nor does it demand that length of service should be a prime 
consideration. It means that the man who has shown his capacity and 
proved his merit in the service of the company should be given the pref- 
erence over an outsider if he is competent to fill the position which is 
vacant. It will of course occasionally happen that no one of the em- 
ployees is capable of filling the position; then and only then should an 
outsider be brought in. 

Fair and liberal treatment of employees in other matters is dictated 
not only by the principles of justice but by wise policy as well. Salaries 
should be reasonably liberal, and in their adjustment the ability re- 
quired, the responsibility assumed and the length of individual service 
should be among the matters considered. Vacations should be given to 
all employees each year as a matter of course. They should be arranged 
according to a definite plan and not be put off until asked for^ and 
should be announced long enough in advance to enable each one to 
make his plans. The best-managed companies not only permit but re- 
quire every employee to take a vacation each year, not only because the 
vacation will enable the employee to do better work, but because it gives 
opportunity to judge better the accuracy, faithfulness and integrity 
shown in his work. The average length of vacation for employees below 
official rank is about two weeks. In order to care for the work during 
vacations and during sickness and unavoidable absences for other reasons, 
one or more general clerks who are able to step in and fill any position 
should be employed. 

In spite of a well-defined prejudice against them on the part of 
many officials, women have made their way into the ranks of trust com- 
pany workers and are filling a variety of different positions, and in 
many cases filling them with exceptional merit. They are most fre- 
quently found in the position of stenographer, but there are many 
women who are capably filling the positions of bookkeeper, teller, 
clerk, etc. 

All employees having any degree of responsibility — and this includes 
nearly all, if not quite all — should be bonded in reasonable amounts. Ex- 
cept perhaps in the smallest towns, the practice is quite universal to use 
bonds of surety companies, the premiums for which are paid by the 
employing company. 

Every reasonable opportunity should be given to employees to learn 
the business in other departments than the one in which their own work 
lies. Occasional shifting of positions is a help in this direction, and on 
occasions when the work is especially heavy in any one department, 



332 TRUST COMPANIES. 

employees of other departments may be encouraged to help out — no one 
being permitted, of course, to slight his own work. He is a short-sighted 
official who is not willing to answer questions and explain puzzling prob- 
lems to ambitious employees who are striving to become masters of 
different departments of the work. If an employee is lacking 
in education, he should be encouraged to utilize such opportuni- 
ties as are offered by the night schools or the classes conducted under 
the auspices of Young Men's Christian Associations in the cities. An 
especially valuable medium for the acquirement of knowledge and of 
training, the strengthening and broadening of character and the stimula- 
tion of ambition is found in the work of The American Institute of Bank- 
ing, of which local organizations or chapters are now found in most of 
the large cities, and in many smaller ones. This institute, which was 
organized by and is conducted under the auspices of The American 
Bankers' Association, is doing a splendid work among bank and trust 
company employees, both young and old, and should receive the most 
cordial support from every wide-awake trust company official. 



CHAPTER XIV. 

SUNDRY TOPICS. 

Fees. 

EXCEPT in the few communities in which trust companies are so well 
established that there is something approaching a standard S( hed- 
ule of fees, the question of the proper charges to make for services 
rendered by the trust department is often a difficult one. This is due not 
only to the fact that in most communities there is no set standard for 
guidance, but also to the fact that a number of matters must be taken into 
consideration — the amount of clerical work involved, the knowledge and 
training, or in other words the professional skill, required, the value of 
the service to the customer, and most important of all, the degree of re- 
sponsibility, legal and moral, assumed by the company. The charge may 
be tempered, too, by the probable incidental profits of the work due to 
new business obtained thereby. 

That there exists considerable difference of opinion among trust com- 
pany officials regarding the matter of fees has been shown by discussions 
at the conventions of the Trust Company Section of the American Bank- 
ers' Association. 70 These discussions also demonstrated that it is quite 
impossible, even if desirable, to devise a uniform scale of charges for 
given kinds of services which could be made applicable throughout the 
country or even throughout a state. Local conditions vary so greatly 
that a schedule of fees suitable for one locality would be too high for a 
second and too low for a third. Indeed, the actual value of the service 
and its cost in labor and in responsibility assumed differ so much that 
even in two cases of the same kind of services rendered by the same com- 
pany there may justly be different scales of charges. So far as the ser- 
vice is professional in its character, the matter of fees is subject to about 
the same considerations as the determination of the fee of the lawyer, and 
is affected by the customs of the community. The country lawyer expects 
to receive a smaller fee than the lawyer in the large city, and he often 
gauges its amount in part by the value of the service to the client, and in 
some cases takes into consideration the latter's financial ability. 

The simplest element of the problem is the amount of clerical labor 
involved. This is not always easy to determine in advance; as, for ex- 
ample, in the work of transfer agent, in which the amount of work will 
depend, after the original issue, upon the activity of the stock. When 
possible, it is wise to defer the matter of fee until enough experience has 
been gained to form a somewhat reliable estimate of the amount of work 
required. But even when known with exactness, the amount of clerical 
labor involved should be a matter of minor importance in the determina- 
tion of the fee. 



76 See Proceedings Trust Company Section, in particular 1904. 

333 



334 TRUST COMPANIES. 

The professional ability demanded is a matter of considerable weight, 
and this factor of the problem should ultimately result in larger fees than 
are prevalent for certain services. The trust company is held liable for 
sufficient legal and technical ability and carefulness to do the work cor- 
rectly, and is entitled to proper compensation therefor. 

The value of the service to the customer is an important consideration 
which should be given careful study; but it is not an exact means of de- 
termining the fee. A corporation may require the services of a trust com- 
pany as a sine qua non, but would hardly consent to pay a fee measured 
by the necessity of obtaining the service. 

The benefit which may accrue to the company in the way of new busi- 
ness resulting from the work is a matter worth consideration, especially 
by new companies and by companies located where the trust company is 
not firmly established; but it is evident that this consideration, like the 
cut-price sales of the merchant, can be operative only in exceptional 
cases. One can not always do business at less than cost for the sake of 
new business to be taken on the same terms. 

The most important matter of all is the responsibility, both legal and 
moral, which the company must assume. This is in some cases the hardest 
thing to determine, owing to the absence of either statutory laws or court 
decisions which clearly define the liabilities of trust companies acting in 
certain capacities, and owing to the ignorance of the public, which is apt 
to hold the trust company morally responsible in case of loss upon any 
document upon which the trust company's name appears in any capacity. 

Fees for Acting as Executor, Etc. 

Fees for services as executor, administrator, guardian, etc., are in 
many states fixed by statute, or are determined by the court, and are the 
same for a trust company as for an individual. In New York the statute 
fixes the fees at five per cent, upon the first $1,000, 2^ per cent, upon 
the next $10,000, and one per cent, upon all over $11,000 of the princi- 
pal, with an annual fee on the income at the same rates. No fee is al- 
lowed upon the value of the real estate unless same is sold under order of 
the court. In cases of extraordinary difficulty or responsibility the court 
may increase such fees. In Ohio the statute fixes the fees of executors 
and administrators at six per cent, upon the first $1,000, four per cent, 
upon the next $4,000, and two per cent, upon the excess over $5,000 of 
personal property. The Missouri statute allows executors and adminis- 
trators a commission of five per cent, upon disbursements of personal 
property. 

These rates usually serve as the basis for determining fees of testa- 
mentary trustees and fees in any trust coming through law or by appoint- 
ment of the court, and are guides in fixing the charges for the care of 
estates held in trust from whatever source. 



SUNDRY TOPICS. 335 

Fees for Care of Estates Under Private Agreement. 

When the trust comes by private agreement, the company is of course 
at liberty to make the best terms it can as to fees. In one large eastern 
city, the usual charges are one per cent, on the principal, often payable 
one-half at the beginning and one-half at the termination of the trust, 
and an annual fee of 2% per cent, on the income if the funds are invested 
or to be invested in coupon bonds or stocks. If part is in real estate, 
some companies make the charge on income five per cent., handling the 
real estate themselves, while others keep the charge at 2% per cent., first 
deducting an outside real estate broker's charge for handling the real 
estate. In another city, common charges are two per cent, on the prin- 
cipal at the termination of the trust, with an annual commission on the 
income of three per cent, on that part derived from personal securities 
and five per cent, on that part derived from real estate. In some places 
the charge is five per cent, on the income without reference to whether 
the estate owns real property. Another scale of charges employed is a 
commission of from one-half per cent, to one per cent, for the investment 
or reinvestment of the principal, payable at the times such investments 
are made, and from three per cent, to five per cent, on the income accord- 
ing to the proportion of the principal invested in real estate. 

Fees of an Assignee or Receiver. 

The fees allowed to an assignee or a receiver are fixed by statute or 
determined by the court. In New York the assignee's fee is five per cent, 
on the whole sum handled, and the receiver's fee is fixed by the court at 
a figure not exceeding five per cent. The receiver of a corporation may 
receive five per cent, on the first $100,000 received and disbursed, and 
2% per cent, on the excess over $100,000; but the total fee may not 
exceed $12,000 for any one year, nor be greater than at the rate of $12,- 
000 per annum for a fraction of a -year. 

Fees as Trustee Under a Bond Issue. 

Fees for acting as trustee under a bond issue are generally based on 
a charge of a certain amount per bond, the amount in many cities being 
one dollar a bond for small issues and fifty cents a bond for large issues. 
The terms "large" and "small" are of course relative, and their interpre- 
tation differs according to local circumstances. In some places the 
dividing line is at about $200,000; in others, $500,000 or $1,000,000. 
Sometimes, especially in small issues, a special counsel fee is added, 
sometimes not. Some companies make a minimum charge of $100 cover- 
ing everything. There is a well-defined feeling in many quarters that 
the prevalent fees for this work are much too small in view of the fact 
that the legal and moral liabilities assumed are not well determined, and 
may be much larger than is generally realized. 

There is considerable difference of opinion regarding fees for the 
payment of coupons. In New York, where the use of money for ten 



336 TRUST COMPANIES. 

days is of more value than elsewhere, it is generally considered that if 
the money for the payment is deposited from ten to thirty days before 
the coupons mature, the use of the money is sufficient remuneration for 
the work and responsibility undertaken. If the money is not deposited 
in advance, many companies make a charge of from one-eighth to one- 
fourth of one per cent. In places where the use of money for short 
periods is not so valuable, some companies make the charge unless the 
funds have been on hand for a considerable period. Similar considera- 
tions hold in the matter of charge for the disbursement of a sinking fund. 

Fees as Transfer Agent. 

The fees for acting as transfer agent for stock depend upon the cap- 
italization and upon the activity of the stock. The latter element is often 
hard to determine in advance, though the character of the corporation 
gives some clue; the stock of a railroad, for example, being apt to be more 
active than that of a bank. By some it is recognized as a general principle 
that the fees of the transfer agent should be double those of a registrar. 
Minimum fees for very small and inactive issues range from $50 to $100 
a year, the fees for large and active issues running into several thousand 
dollars. In view of the responsibilities assumed, and of the fact that a 
single clerical error in this work may prove very costly, the prevalent 
fees seem inadequate. 

The reader should bear in mind that the fees above stated are by no 
means universal, and are given here only to convey an idea of the charges 
made by some companies. The fees for other kinds of services vary so 
much and depend so largely upon the peculiar circumstances of each case, 
that an attempt to state customary charges would be useless. 

Time-and-Labor-Saving Devices. 

The past generation has witnessed the introduction into the business 
world of a number of devices which save time and labor, and which are 
peculiarly useful to banks and trust companies. Many of them are no 
longer classed as mere conveniences but have become absolute necessities 
for the larger companies. Among these are the typewriter, the telephone 
and the adding-machine. Except in very small companies, the typewriter 
is universally used for correspondence and similar work, and even book 
entries, especially for such records as the trust register, are being made 
by the use of the book typewriter. An increasing amount of business is 
being conducted by telephone, the larger companies maintaining private 
exchanges connecting each desk with the other desks in the office and with 
the outside world. The long-distance telephone enables the official of a 
trust company in Chicago to transact business in New York in a few 
minutes, without leaving his desk. The adding-machine not only lists 
and adds long columns of figures more quickly and more accurately than 
can be done by the most expert bookkeeper, but has become indispensable 
in companies which handle large volumes of business. By its use the 



SUNDRY TOPICS. 337 

taking of trial balances of thousands of accounts is made a short and 
simple operation. Its value is increasing as new uses to which it may be 
put are discovered. 

The work of the teller is lightened by the use of coin counters and 
other conveniences. Duplicating machines enable the advertising depart- 
ment to send out duplicate letters which are hard to distinguish from 
originals. Commercial phonographs make it possible for an officer to 
dictate letters and other matter at such odd moments as he finds conven- 
ient, without wasting the time of the stenographer while waiting during 
the numerous interruptions to which he is always subject. A more re- 
cently introduced device is the telautograph, which reproduces writing at 
a distance. By its employment the teller may write at his desk an in- 
quiry regarding an account which is reproduced immediately at the desk 
of the proper bookkeeper. The latter writes his reply, which is at once 
before the teller, who is thus enabled to get the needed information 
quickly, silently and without attracting the attention of the customer. 
Numerous other devices of greater or less importance are included in the 
equipment of the most progressive companies. A judicious use of these 
improvements enables the company to do better, neater and quicker work 
st a saving over old methods. 

Branch Banking. 

In a few places in which the laws of the state permit, trust companies 
are conducting a branch banking business with such success as to make it 
highly probable that the plan will spread in the near future to other 
localities and to other companies. The same advantages are gained that 
are urged in favor of the Canadian branch banking system, except as to 
currency, though of course on a much smaller scale. A central office is 
maintained in the down-town portion of a large city, and the branches 
are scattered through the outskirts of the city and through the suburban 
towns. In this way communities which are unable to support independent 
savings banks, or at best only small ones, are enabled to have all the ad- 
vantages afforded by the strongest companies. The confidence inspired 
by such a strong institution attracts deposits which had not theretofore 
been in banks at all. Money is brought into communities needing it, 
while from those localities which have a surplus, funds are transferred 
to the central office or to the other branches where the money can be used 
to advantage. From the standpoint of the company, deposits are mate- 
rially increased, while the circle of friends who may furnish business for 
departments other than the banking department is widened. 

Banking by Mail. 

Trust companies have been among the leaders in the promotion of the 
banking-by-mail business, which is really only a part of the growing sys- 
tem of "mail-order business." As applied to banking, this is not alto- 
gether recent in principle, since people have for many years occasionally 



338 TRUST COMPANIES. 

sent deposits and made withdrawals from accounts through the mails. 
The conducting of regular banking-by-mail departments and the effort 
to build up this class of business are, however, phenomena which have 
originated during the past decade. The Pittsburgh Bank for Savings 
claims to have originated the first systematic banking-by-mail department 
in the year 1898. Its deposits at that time amounted to $3,350,000, and 
in three and one-half years were increased to $12,250,000; a considerable 
part of the increase being ascribed to advertising for mail business. A 
number of trust companies and savings banks are now conducting such 
departments and meeting with much success. Pittsburgh and Cleveland, 
because of their four per cent, interest rates paid by solid concerns, have 
some advantage in this class of business; but the possibility of getting 
mail business is by no means dependent upon the interest rate. It appeals 
to many classes of people because of its convenience and because it offers 
one, no matter where located, the opportunity to leave his savings in 
charge of a strong institution. Even in the cities it is often more con- 
venient to mail a deposit than to carry or send it to a bank ; but the special 
advantage of course accrues to persons more or less isolated, farmers and 
residents of small towns having no savings banks — which includes some- 
what over seventy per cent, of the people of this country. The extension 
of the rural free delivery of mail, and the general improvement of the 
postal system, are of course great aids to the business. 

The method employed in conducting the business is simple. Upon 
receipt of an inquiry, a letter is sent with which is enclosed a signature- 
card and a circular describing the method. If the inquirer decides to 
open an account, he has but to place his signature and address on the 
card and mail it with his initial deposit to the company. He receives in 
return a pass-book, which in future transactions can be mailed back and 
forth as deposits or withdrawals are made, or can be left at the com- 
pany's office. In the latter case, a separate receipt is sent for each de- 
posit. The pass-book is made light enough to be carried with a letter 
and a check for one stamp. The depositor may send his deposits in the 
form of New York draft, postal money order, personal check or in cur- 
rency by registered mail. As to the safety of such remittances, the large 
companies doing a banking by mail business advertise that so far as they 
know not a dollar has yet been lost in making them. Remittances to de- 
positors are made upon receipt of letters requesting same, by New York 
draft; or, if specially requested, by postal money order. 

Trust Company Offices and Buildings. 

There is observable among trust companies a growing tendency to 
purchase or construct buildings of their own. Such a course assures a 
permanent location, gives an impression of stability, and often proves of 
value as an investment. Frequently it is the only means of getting the 
exact location desired, or of insuring the most convenient arrangement 
of the offices. 



SUNDRY TOPICS. 339 

Whether occupying its own building or rented quarters, the progres- 
sive company finds it profitable to maintain offices which are attractive and 
convenient. The standard of office equipment is such that the public ex- 
pects a bank or trust company to occupy well furnished quarters, so that 
the cost of a good equipment is more than repaid in advertising value. 
The lobby should be provided with all possible conveniences for custom- 
ers, including writing-desks supplied with good ink, clean pens and blot- 
ters, comfortable chairs, etc. The larger companies often provide sepa- 
rate reading and lounging-rooms for customers, with current newspapers 
and magazines, writing-desks and other conveniences, and committee- 
rooms for the use of customers who wish to meet to arrange details of 
business. In many cases there are special quarters for women, equipped 
with numerous conveniences and in charge of a matron who looks after 
the comfort of patrons. 

The quarters of tellers, bookkeepers and other employees should be 
arranged and equipped with a view to safety, neatness, convenience, sav- 
ing of time and labor and the health of the workers. Attention to these 
matters is amply repaid in better service. The matters of light and fresh 
air are of special importance; when possible the arrangement should be 
such that the light comes from back of the workers, and a well-considered 
ventilating system should be adopted. There is economy in the use of 
up-to-date office furniture and conveniences. Steel is coming to take the 
place of wood in the construction of filing cases and cabinets for keeping 
papers and records which are brought out of the vaults during the day. 

In the general arrangement of the offices the quarters of the banking 
and savings departments usually occupy the location most convenient for 
customers. The trust and other departments having fewer visitors are 
located at the rear of the room or on other floors if the company occupies 
more than the ground floor. The safe-deposit department is usually 
located in the basement, but is sometimes on the ground floor. In the 
large companies the equipment of this department is expensive and as 
nearly perfect in the safeguards provided as modern science can make it. 
Besides being constructed of hardened steel with massive doors opened 
with time locks, the vaults are protected by watchmen on duty day and 
night and in many cities by electrical attachments which if tampered with 
sound an alarm at the offices of detectives who are prepared to investigate 
at once. 

Exclusive Trust Company Buildings. 

In places where the price of land is not very high, it is generally 
agreed that it is of more advantage for a trust company to occupy a build- 
ing devoted exclusively to its use than to have quarters in an office building. 
In large centres where the price of land is very high and the possibility 
exists of large income from the rentals of an office building, there is quite 
a wide difference of opinion as to whether the advantages gained by an 
exclusive trust company building offset the giving up of opportunities for 
revenue from an office building. It is interesting to note that a number 



340 TRUST COMPANIES. 

of prominent and successful trust companies, as well as 
banks, in several large cities have had faith enough in 
exclusive bank buildings to make the investment, and that 
their success in the instances in which the buildings have stood for 
several years has justified their faith. Among the companies now occupy- 
ing such exclusive trust company buildings or having them in course of 
construction are: The Mississippi Valley Trust Company and the Mer- 
cantile Trust Company of St. Louis, both of which were pioneers in this 
movement; The Illinois Trust and Savings Bank, The Northern Trust 
Company and the Central Trust Company of Illinois, of Chicago; The 
Cleveland Trust Company of Cleveland; The Commercial Trust and 
Savings Bank of New Orleans ; The People's Trust Company, The Title 
Guarantee and Trust Company and the Knickerbocker Trust Company 
of New York; The New England Trust Company of Boston; The Ameri- 
can Security and Trust Company of Washington; The Pennsylvania 
Company for Insurance on Lives and Granting Annuities, and The 
Girard Trust Company, of Philadelphia. 

Whether such magnificent exclusive trust company buildings as these 
companies and others have are profitable from the standpoint of the com- 
pany or not, there is no question that they add very materially to the 
beauty of the cities in which they are located, and reflect credit upon the 
public spirit of their builders. They mark a step toward the greater ap- 
preciation for art and architecture shown by the older cities of Europe, 
whose banks in most large centres greatly excel ours in this respect. 

Membership in Federal Reserve Banks. 

Under the provisions of the Federal Reserve Act, there are two ways 
in which trust companies which are classed as "State banks" may be- 
come members of Federal Reserve Banks. Section 8 provides that "Any 
bank incorporated by special law of any State or of the United States 
or organized under the general laws of any State or of the United 
States and having an unimpaired capital sufficient to entitle it to become 
a national banking association under the provisions of the existing laws 
may, by the vote of the shareholders owning not less than fifty-one per 
centum of the capital stock of such bank or banking association, with the 
approval of the Comptroller of the Currency be converted into a national 
banking association, with any name approved by the Comptroller of the 
Currency. Provided, however, that such conversion shall not be in con- 
travention of the State law." 

Section 9 of the act authorizes State banks to make application to 
become members as State banks, retaining their State charters, and con- 
tinuing to exercise those powers conferred by their charters which are 
not in conflict with the specific provisions of the Federal Reserve Act. 

Regulation No. 3, issued by the Reserve Bank Organization Commit- 
tee on February 20, 1914, prescribes the regulations under which mem- 
bership may be obtained by State banks and trust companies, and reads 
as follows: 



SUNDRY TOPICS. 341 

REGULATIONS AND BY-LAWS, RESERVE BANK ORGANIZATION 

COMMITTEE, prescribing conditions under which State Banks and Trust 

Companies may subscribe to the stock and become members of Federal 

Reserve Banks. 

Washington", D. C, February 20, 1914- 
Regulation No. 3. 

Section 9 of the Federal Reserve Act reads in part, as follows: 

"Any bank incorporated by special law of any State, or organized under 
the general laws of any State* of the United States, may make application to 
the reserve bank organization committee, pending organization, and thereafter 
to the Federal Reserve Board for the right to subscribe to the stock of the 
Federal Reserve bank organized or to be organized within the Federal Reserve 
district where the applicant is located. The organization committee or the Fed- 
eral Reserve Board, under such rules and regulations as it may prescribe, subject 
to the provisions of this section, may permit the applying bank to become a 
stockholder in the Federal Reserve bank of the district in which the applying 
bank is located. Whenever the organization committee or the Federal Reserve 
Board shall permit the applying bank to become a stockholder in the Federal 
Reserve Bank of the district, stock shall be issued and paid for under the rules 
and regulations in this Act provided for national banks which become stock- 
holders in Federal Reserve banks." 

Pursuant to the provisions of this section, the Reserve Bank Organization 
Committee has prescribed the following regulations and by-laws specifying the 
conditions under which State banks and trust companies may become members of 
Federal Reserve banks. 

First. — Any State bank or trust company eligible to membership in a Fed- 
eral Reserve bank under the Federal Reserve Act and desiring to subscribe to 
the capital stock of the Federal Reserve bank to be organized in the district which 
will include the place of business of such State bank or trust company shall 
submit to its board of directors for consideration a resolution in the following 
form, to wit: 

Whereas, Under section °2 of the act of Congress known as the Federal 
Reserve Act, approved on the 23d day of December, 1913, it is provided that: 
"Under regulations to be prescribed by the Organization Committee every national 
banking association in the United States is hereby required and every eligible 
bank in the United States and every trust company within the District of 
Columbia is hereby authorized to signify in writing within sixty days after the 
passage of this act, its acceptance of the terms and provisions thereof;" and 

Whereas, This bank is believed by the Board of Directors to be eligible to 
membership and to have the right to subscribe to the capital stock of the Federal 
Reserve Bank to be organized; and 

Whereas, It is the intention of this Board to apply under the provisions of 
the Federal Reserve Act for its proper, proportion of stock of the Federal Re- 
serve Bank to be organized within the district in which this bank will be located 
when the geographical limits to be served by such Federal Reserve Bank have 
been fixed and announced by the Organization Committee: 

Now, therefore, be it resolved, That the president of this bank be, and he 
hereby is authorized, empowered and directed to notify the Reserve Bank Organ- 
ization Committee that this bank will apply for an allotment of stock of the 
Federal Reserve Bank aforesaid, and if granted, will become a member of such 
Federal Reserve Bank subject to the provisions of the Federal Reserve Act. 

When such resolution has been passed by the board of directors, the presi- 
dent or executive officer of such State bank or trust company shall transmit a 
duly certified copy of such resolution to the Reserve Bank Organization Com- 
mittee at Washington. 

Second. — When the location of the several Federal Reserve banks provided 
for in the Federal Reserve Act have been established and the districts to be 
served by such Federal Reserve banks have been defined, the committee will 
cause to be forwarded to such State banks or trust companies, at the same time 
that applications are forwarded to national banks under the provisions of the 
Federal Reserve Act, a form of application for an amount of capital stock in such 
Federal Reserve bank equal to 6 per cent, of the unimpaired capital stock and 
surplus of such State bank or trust company. This application must be accom- 
panied by a statement showing the assets and liabilities of such State bank or 



342 TRUST COMPANIES. 

trust company listed on forms approved by the Committee. These forms will 
be furnished by the Committee upon request. The Board of Directors or a 
committee composed of not less than five members of such Board shall certify 
that in their opinion the assets listed in the manner prescribed by the Committee 
represent actual existing values and that in the opinion of said Board none of such 
assets are carried at an excessive valuation on the books of said bank. 

State banks and trust companies shall also file with their applications for 
membership copies of their charters, with amendments, and a digest thereof 
showing the powers (granted by such charters and amendments) classified to 
indicate: 

a. Those powers which such banks and trust companies have exercised and 
desire to continue to exercise. 

b. Those powers which, while granted, have not been exercised and which 
such banks and trust companies will not desire nor attempt to exercise as mem- 
bers of the Federal Reserve System. 

Third. — In lieu of a special examination of the condition of such bank by 
a national bank examiner or examiner appointed by the Committee or the Federal 
Reserve Board, the Committee may accept a certificate from a duly accredited 
State examiner or bank commissioner to the effect that the statement filed by the 
board of directors as aforesaid represents the true condition of such State bank 
or trust company and that the capital stock of such bank is in the opinion of 
such examiner or commissioner unimpaired, the surplus represents actual exist- 
ing values and the liabilities are as shown by such statement. The Committee, 
however, will reserve the right in any case to require a special examination by 
a national bank examiner or an examiner selected by the Committee or by the 
Federal Reserve Board as a condition precedent to membership in any Federal 
Reserve bank. 

Fourth. — Only those banks which have an unimpaired capital sufficient to 
entitle them to become national banking associations under the provisions of the 
National Bank Act shall be considered as eligible to membership in a Federal 
Reserve bank. 

In accordance with section 5138, U. S. Revised Statutes, as amended by the 
act of March 14, 1900, State banks or trust companies in order to be eligible 
to membership must have unimpaired capital stock, as follows: 

In cities or towns of less than 3,000 inhabitants, $25,000. 

In cities or towns of more than 3,000 inhabitants but less than 6,000 inhabi- 
tants, $50,000. 

In cities of more than 6,000 inhabitants but less than 50,000 inhabitants, 
$100,000. 

In cities of more than 50,000 inhabitants, $200,000. 

Fifth. — State banks becoming members as such under the provisions of 
section 9 of the Federal Reserve Act and retaining their State charters shall be 
subject to the provisions of section 9 and to such other provisions of the Federal 
Reserve Act as are applicable thereto. 

Sixth. — State banks desiring to become members under section 8 of the 
Federal Reserve Act by being first converted into national banks in accordance 
with the provisions of this section, shall become members as national banks. 
Where such conversion into national banks is completed before the expiration of 
60 days from the passage of the Federal Reserve Act, such banks should file 
with the Organization Committee the form of resolution prescribed by the 
Committtee to signify their acceptance of the terms and provisions of the Federal 
Reserve Act before February 23, 191-1. Where such conversion is not completed 
before the expiration of the 60 days aforesaid, the board of directors of such 
banks shall, in executing the articles of association and organization certificate as 
required by section 8, at the same time adopt the resolution prescribed by the 
Organization Committee as aforesaid, and such resolution shall accompany the 
organization certificate filed with the Comptroller of the Currency. 

Seventh. — Where such conversion is completed after the organization of the 
Federal Reserve banks, such organization certificate shall be accompanied by an 
application to the Federal Reserve Board or to the Organization Committee for 
an amount of stock equal to 6 per cent, of the unimpaired capital and surplus 
of such bank. 

Eighth. — Whenever a trust company shall become converted into a national 
bank under the provisions of section 8 of the Federal Reserve Act and shall 



SUNDRY TOPICS. 343 

desire to continue to act as trustee, executor, administrator or registrar of stocks 
and bonds, such organization certificate shall, when filed with Comptroller of 
the Currency, be accompanied by an application to the Federal Reserve Board 
for permission to engage in such business, and no certificate for the conversion 
of such trust company into a national bank shall be approved by the Comptroller 
of the Currency until the Federal Reserve Board has granted this permission 
under rules and regulations prescribed by it. 

Ninth. — Whenever a State bank or trust company with established branches 
shall make application for conversion into a national bank and shall desire to 
retain such branches, such State bank or trust company shall comply with section 
5155, l T . S. Revised Statutes, which reads as follows: 

"It shall be lawful for any bank or banking association organized under 
State laws, and having branches, the capital being joint and assigned to and 
used by the mother-bank and branches in definite proportions, to become a 
national banking association in conformity with existing laws, and to retain and 
keep in operation its branches, or such one or more of them as it may elect to 
retain; the amount of the circulation redeemable at the mother-bank, and each 
branch, to be regulated by the amount of capital assigned to and used by each." 

Tenth. — State banks or trust companies applying for membership in the 
Federal Reserve System under section 8 of the Federal Reserve Act by con- 
version into national banking associations, or applying for membership under 
section 9 as State banks will, if otherwise found to be eligible, be given a reason- 
able time within which to adjust the loans and investments of such banks to con- 
form to the requirements of the Federal Reserve Act and other laws of the 
United States applicable thereto. Any bank applying for membership and having 
loans to any one person, firm or corporation in excess of the limit allowed by 
the Federal Reserve Act or other loans and investments prohibited by such act 
shall, before being admitted to membership, give satisfactory assurance to the 
Committee or to the Federal Reserve Board that such loans and investments 
will be eliminated or made to conform to the provisions of the Federal Reserve 
Act and other applicable laws not later than January 1, 1915. 

The condition of the applying bank or trust company and the general nature 
of its business will be considered by the Committee in each case in determining 
whether such banks shall be admitted to membership. 

Eleventh. — The Committee or the Federal Reserve Board will from time to 
time adopt and publish such additional regulations and by-laws as may be 
deemed necessary and advisble. 

W. G. McAdoo, ChaiYman, 
D. F. Houston, 
J. S. Williams, 
Reserve Bank Organization Committee. 

Will Trust Companies Generally Become Members? 

The way being open for trust companies, or at least those trust com- 
panies which are classed as State banks, to become members of the Fed- 
eral Reserve Banks, the question presents itself to the officials of each 
company whether, all things considered, it is advisable for their company 
to exercise the privilege. At the present writing (December 9, 1914), 
very few trust companies have applied for membership, and there is an 
evident disposition on their part to await developments. Judging from 
the expressed opinions of trust company officials as reported in the finan- 
cial papers, and by the remarks made in the discussion of this question 
in the recent annual convention of the Trust Company Section of the 
American Bankers Association, this waiting is not due to opposition to 
the Federal Reserve Bank plan as a whole. It is, however, doubtless in- 
fluenced by the feeling that the provisions of the act are not yet adjusted 
as well as they should be to the needs of trust companies which might 
become members. 



344 TRUST COMPANIES. 

So far as trust companies which do no commercial banking business 
and do not handle commercial paper are concerned, it is safe to say that 
very few of them will enter the system, for the simple reason that the 
system is not designed for such institutions, and offers them few induce- 
ments to join. In fact, it is doubtful if membership will give them any 
advantages which they will not gain in an indirect way outside of the 
system, except the possible prestige that may attach to such membership. 
From the principal supposed advantage of membership in a Federal Re- 
serve Bank, — the right to rediscounts. — they are utterly barred because 
of the fact that they have no such paper to offer. Their loans are se- 
cured either by collateral or by mortgage security, and such loans are 
not eligible for rediscount. As was frankly stated by the Secretary of 
the Federal Reserve Board in his address at the recent meeting of the 
American Bankers Association, "The Federal Reserve System is essen- 
tially intended as a commercial banking system. It is, therefore, not 
desirable that any bank should enter the system unless it is doing or in- 
tends to do a commercial business." 

There is another class of trust companies, which combine a com- 
mercial banking business with a considerable amount of trust and sav- 
ings business. They would have something to gain in the privilege of 
rediscount. As the case now stands, however, it appears to be an open 
question whether the Federal Reserve Board may not impose some condi- 
tions upon their exercise of fiduciary functions which will seriously in- 
terfere with that branch of their business; and some companies are await- 
ing definite decision on this point. Otherwise the viewpoint of these com- 
panies is much the same as that of the class of trust companies men- 
tioned below. 

The case of those trust companies which are practically commercial 
banks with a savings department but exercising no trust functions is 
quite different from that of other trust companies ; and is little different 
from that of the State banks, inasmuch as the latter usually do a sav- 
ings business in addition to commercial banking. 

With such companies the problem is that of weighing the advantages 
to be gained by membership against the disadvantages which it would in- 
volve for them. They would gain in the rediscounting privileges and in 
the provisions of the Federal Reserve Act for the clearing and collection 
of checks, and in whatever other special benefits members may enjoy; 
and they would have whatever prestige may attach to members of the 
system. The attractiveness of these advantages is lessened somewhat by 
the probability that even as non-members they would be able to get ac- 
commodations from their national bank correspondents more freely than 
at present because of the advantages which the latter will enjoy from 
rediscounts; and also by the question whether, for the present at least, 
they would as members enjoy greater privileges in the clearing and col- 
lecting of checks than they now obtain from large collecting banks which 
place extensive par lists at their disposal. 



SUNDRY TOPICS. 345 

The objections to becoming members, aside from the necessity of in- 
vesting six per centum of capital and surplus in the stock of the Federal 
Reserve Bank, lie in the regulations which must be complied with. 

The capital stock of member banks must be from $25,000 to $200,- 
000, according to population of the town or city in which located. For a 
large number of companies this requirement involves no hardship, since 
the State laws in some cases require as large a capital, while many com- 
panies have a larger capital than is required by law. However, there 
are of course some companies to which this would be an obstacle. 

The reserve requirements for member banks are, on savings deposits 
five per centum in all cases, and on commercial deposits eighteen per 
centum in Central Reserve cities, fifteen per centum in Reserve cities, 
and twelve per centum elsewhere; the amount of the actual cash reserve 
in these classes of cities being respectively six per centum, five per cen- 
tum and four per centum. A comparison of these percentages with the 
reserve requirements for trust companies in the different States, given in 
Chapter IV., shows that these requirements for members are in some 
cases less than those required under the State laws, and that there are 
few cases in which they would be relatively burdensome, unless perhaps 
as to the amount of cash reserve. 

The provisions for examinations of members and for reports by them 
to the Federal authorities would hardly deter any well-managed trust 
company from becoming a member. 

Of more importance to many trust companies are the provisions re- 
garding loans by member banks. The Federal Reserve Act forbids 
loans of amounts which are not classed as excessive by the trust company 
laws of many of the States, and membership would therefore require the 
closing out of such loans. The inability of members to make real estate 
loans, except loans on farm lands under certain restrictions, is regarded 
as even a greater hardship, as most trust companies make such loans, and 
in some parts of the country the prosperity of the community is prac- 
tically dependent upon the ability to get such loans. 

What the final outcome of the question of trust company membership 
in the Federal Reserve Bank System will be depends upon developments. 
Changes which no one now foresees may take place in the character of 
members of the Federal Reserve Banks and of trust companies. It is 
quite possible that some changes may be made in the provisions for mem- 
bership in the Federal Reserve Banks. Events may tend to differentiate 
more than ever the trust companies which do a large trust business from 
those whose business is mainly banking. The power to do trust business 
which the Federal Reserve Act gives to National banks may in time lead 
a considerable number of such banks to enter the trust company field. In 
any event, in or out of the system, the trust companies throughout the 
country may doubtless be depended upon, so far as self-preservation will 
let them, to cooperate in promoting the success and the development of 
the Federal Reserve Bank System. 

23 



CHAPTER XV. 

THE DUTIES AND LIABILITIES OF TRUST COMPANIES ACT- 
ING IN VARIOUS CAPACITIES. 77 

Duties as Transfer Agent. 

THE duty of the transfer agent is to act for the issuing corporation 
in the matter of making transfers of the ownership of its stock 
from one holder to another. This involves the passing upon the 
regularity and legality of the assignment of title; the noting of the trans- 
action upon the transfer books of the corporation; the cancellation of the 
old certificates and the execution and delivery of new certificates. In- 
cidentally it involves the furnishing to the corporation of a certified list 
of the stockholders whenever the books are closed for the payment of 
dividends, and at other times as demanded. 

The performance of these duties requires that the transfer agent be 
the custodian of the stock books and the seal of the issuing corporation 
and of a supply of blank certificates. The certificates, bound in book 
form so that each certificate and its stub form one page, and numbered 
consecutively, are before delivery to the transfer agent signed by the 
proper officers of the corporation. The face of the certificate usually con- 
tains the provision that it is not valid unless countersigned by the transfer 
agent. On its back is usually printed an assignment of the stock and an 
irrevocable power of attorney, of which the following is a common form: 

"For value received hereby sell, assign and trans- 
fer unto the shares of capital 

stock represented by the within certificate, and do hereby 

irrevocably constitute and appoint . . . t .... 

attorney to transfer the said stock on the books of the with- 
in-named company, with full power of substitution in the 
premises. 



Dated 190 

In presence of 



77 While the duties of trust companies acting in various fiduciary capacities 
are fairly well established by custom and in some cases by legislative enactment, 
their exact liabilities, especially in corporate trusts, such as those of transfer 
agent and registrar, are sometimes undetermined either by statute or by court 
decisions, and are the subjects of wide differences of opinion among trust com- 
pany officials and among lawyers. In the following discussion, so far as it re- 
lates to liabilities, the writer has endeavored to state the various positions taken 
by different writers quoted, to whom he wishes to acknowledge his indebtedness 
346 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 347 

Before making delivery of a certificate, the transfer agent dates it, 
fills in the name of the new holder and the number of shares represented, 
affixes the seal of the issuing corporation and attaches the proper signa- 
ture to the transfer agent's certificate. The form of this certificate rec- 
ommended by a committee of the Trust Company Section of the American 
Bankers' Association reads as follows: 78 

"Countersigned: 

Trust Company, as Transfer Agent, 

By , Secretary." 

At the time of accepting an appointment as transfer agent, trust com- 
panies require certain information from the issuing corporation regarding 
its organization and the issue of its stock, the exact nature and amount of 
such information varying according to the policy of the trust company. 
The following are the requirements published by The Old Colony Trust 
Company of Boston: 

"Corporations desiring the trust company to act in either of these 
capacities (transfer agent or registrar) should submit the following 
papers. Additional papers will be called for if required: 

(a) Certificate of incorporation of the company, certified by the Sec- 
retary of State of the state where the corporation is domiciled. 

(o) Minutes of the organization meetings of the stockholders and 
directors of the company, showing compliance with the necessary formali- 
ties to make the incorporation legal, such minutes to be certified by the 
clerk or secretary of the company. 

(c) By-laws, similarly certified. 

(d) Copies, similarly certified, of all votes, both of stockholders and 
directors, authorizing the issue of stock of the company, together with the 
certificate of the treasurer or other proper officer stating the exact amount 
of stock outstanding, which was issued under each of such votes. If 
approval by the state is necessary in any form — e. g., by railroad commis 
sioners — formal evidence of such approval, and generally of compliance 
with all conditions precedent to the issue. 

(e) If the stock is issued as fully paid, evidence that such is the case, 
either in the form of a certificate of the treasurer to payment in cash at 
par, or, if the law of the state permits payment to be made otherwise 
than in cash, then satisfactory proof that payment has been made in 
compliance therewith. 

(f)Copy of the form of stock certificate which is to be issued, and 
which the trust company is expected to sign. This should be submitted 
for approval before it is engraved. 



for the information given and for many of the opinions advanced. It is perhaps 
hardly necessary to remark that this discussion is intended merely to show the 
different views that are current on the subjects treated, and does not pretend to 
state conclusions ex cathedra, the writer making no claim to expert knowledge in 
the matter. In any transaction other than one which is absolutely plain and sim- 
ple, no trust company official or employee should proceed without competent legal 
advice. 

78 Proceedings Trust Company Section, 1905, p. 7. 



348 TRUST COMPANIES. 

(g) Vote of directors certified as in (b) approving the form of stock 
certificate; also vote similarly certified appointing the transfer agent 
and agent to register transfers of the company. 

(Ji) List similarly certified of the officers and directors of the com- 
pany, with sample signatures of such as may sign certificates." 

The practical work of transferring stock requires a high degree of 
intelligence and care and a thorough knowledge of the law governing such 
transfers. The risks involved aside from possible clerical mistakes, er- 
rors in bookkeeping, dishonesty or gross carelessness on the part of the 
employees who actually do the work, include mistakes of law or of fact 
in making transfers on forged endorsements, or on insufficient authority, 
or in violation of law, especially in cases of certificates held by persons as 
trustees for others. Certificates endorsed in blank are often presented for 
transfer by persons other than the holders of record. The transfer agent 
must know the signatures of stockholders or otherwise identity them be- 
yond question. Where stock is held in fiduciary capacities, the agent must 
know the terms and powers under which it is held. When a certificate is 
presented for transfer, the transfer clerk should know that the certificate 
itself and the power of attorney accompanying it are genuine; that the 
transferrer is legally competent to make the transfer : that no notice has 
been given the company of any outstanding claims against the stock: that, 
in the absence of direct notice, there is no implied notice of claims, such 
as the certificate itself may give when standing in the name of a trustee. 

Liabilities as Transfer Agent. 79 

On the subject of the exact liabilities assumed by the transfer agent 
in agreeing to perform these services, there is a considerable difference of 
opinion, which is readily accounted for by the fact that there is no statute 
law covering the case, and very little law in the shape of court decisions. 
While the office is sometimes undertaken under special contract which de- 
tails the liabilities to the issuing corporation, the more common method of 
appointment is by a mere resolution of the directors of the issuing cor- 
poration appointing the Blank Trust Company as the transfer agent of its 
stock, and the acceptance of the appointment by the latter. This method 
assumes that the duties and liabilities of the position are so well known 
as to require no definition; an assumption which is justified so far as 
routine duties are concerned, but which as to liabilities seems inconsistent 



79 Readers wishing to consult fuller discussions of this subject and of the lia- 
bilities of trust companies acting as registrars are referred to the following arti- 
cles, some of which are quoted herein: Proceedings Trust Company Section A. 
B. A. 1896-1903, pp. 59-75, article by Felix Rackemann; pp. 184-199, article by Hen- 
ry J. Bowdoin and discussion of same. Proceedings Trust Company Section A. B. 
A. 1904, pp. 28-41, article by Jordan J. Rollins; pp. 85-86, letter from Noble B. 
Judah, and discussion preceding. Proceedings Trust Company Section A. B. A. 
1905, pp. 6-8, Report of Executive Committee. "The Banking Law Journal," Vol. 
XXII, pp. 717-720, article by C. F. Morris. "Trust Companies" Vol. I, pp. 418-421, 
497-503, 609-613, articles by Ross Perry; pp. 989-990, article by E. C. Hebbard; 
Vol. II, pp. 416-418, article by Willard V. King; Vol. Ill, pp. 12-14, article by 
Charles A. Greene. 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 34-9 

with the divergent opinions held by officers of banks and trust companies 
which act as transfer agents. The difference of opinion does not concern 
what the trust company accepting an appointment expects and intends to 
undertake, but has reference to possible implied and incidental obligations 
which it does not intend to assume, but for which, in the opinion of 
some writers, the courts may hold it responsible. "It is well understood 
in banking and trust company circles that the transfer agent undertakes 
to say to the purchaser of the stock which it has countersigned no more 
nor less than that such stock is a genuine portion of the capital stock of 
the issuing company, that the said company has been duly authorized to do 
business by the Secretary of the State in which the company is incorpor- 
ated, and that the signatures of the officers to the certificates of stock are 

"80 

genuine. 

Liabilities of a Corporation Acting as Its Own Transfer Agent. 

Before stating the variant views of different writers on the subject 
in hand, it will be useful to inquire into the extent of the liabilities of cor- 
porations when they transfer their stock through one of their own officers 
or employees. It is of course beyond the scope of this article to discuss 
the law of stock transfers, concerning which elaborate text-books may be 
read. A few instances showing the liabilities involved will be sufficient 
for the present purposes. 

In an able paper on the subject read before the Trust Company Sec- 
tion of the American Bankers' Association, 51 Jordan J. Rollins showed that 
improper transfers may arise "Equally through honest mistake, negligence 
or fraud." Illustrating the statement, he instances cases in which errors 
have occurred and the issuing corporations have been held liable : 

(a) Through a mistake of fact where the title to stock was affected 
by a law peculiar to a foreign state or country. He quotes the United 
States Court of Appeals that "The validity of a transfer of stock is gov- 
erned by the law of the place where the corporation is created." 

(&) Through a mistake of fact where the title to stock was affected 
by some complicated contractual relation. 

(c) Through a mistake of fact where a person acting as attorney for 
another exceeded his authority in making a transfer. 

(d) Through fraud on the part of the officer in charge of transfers. 

As a brief statement of the responsibility of the issuing company, he 
quotes the United States Supreme Court (Telegraph Co. vs. Davenport, 
97 U. S. 369, at p. 371) as follows: 

"The officers of the company are the custodians of its stock book, 
and it is their duty to see that all transfers of shares are properly made, 
either by the stockholders themselves or persons having authority from 
them. If, upon the presentation of a certificate for transfer, they are at 



80 C. P. Morris, in "Banking Law Journal," Vol. XXII, p. 718. 

81 Proceedings Trust Company Section 1904, pp. 29-33. 



350 TRUST COMPANIES. 

all doubtful of the identity of the party offering it with its owner, or if 
not satisfied of the genuineness of a power of attorney produced, they 
can require the identity of the party in the one case, and the genuineness 
of the document in the other, to be satisfactorily established before al- 
lowing the transfer to be made. In either case they must act upon their 
own responsibility. In many instances they may be misled without any 
fault of their own, just as the most careful person may sometimes be in- 
duced to purchase property from one who has no title, and who may per- 
haps have acquired its possession by force or larceny. Neither the ab- 
sence of blame on the part of the officers of the company in allowing un- 
authorized transfer of stock nor the good faith of the purchaser of 
stolen property, will avail as an answer to the demand of the true owner." 

He also quotes the Supreme Court of Massachusetts (Crocker vs. Old 
Colony R. R. Co., 137 Mass. -117) as follows: 

"When a transfer of stock is presented to a corporation it is bound at 
its peril to see that it is a genuine transfer by one who has power of dis- 
position over the stock. . . . If it issues a certificate upon a forged 
or unauthorized transfer, the. real owner retains his property in the stock 
and the corporation may be liable to a bona-fide holder of the new cer- 
tificate." 

On the other hand, quoting the same case: 

"If a proper transfer is presented to a corporation it is its duty to 
issue a new certificate in accordance with it, and if it refuses, it is liable 
to the person to whom the transfer is made." 

Summing up this portion of his paper, Mr. Rollins concludes, "For 
all loss occasioned, whether by fraud, negligence or unavoidable mistake^ 
by it or its agents in the transfer of its stock, such corporation is abso- 
lutely liable, and no excuse can mitigate its liability." 

Special risks are involved in the transfer of stock at the instance of 
executors, administrators, trustees or guardians. In a series of articles on 
this phase of the subject in "Trust Companies" magazine 82 Ross Perry 
cites a number of cases showing the character of the risks. These include : 

(a) A case where stock held in trust under a will was ordered dis- 
tributed by a lower court and the corporation so distributing it was 
afterwards held liable by the Supreme Court of the state (Tennessee), 
notwithstanding the instructions of the lower court, on the ground that 
the distribution was not in accordance with the terms of the will, of which 
the corporation had or ought to have had notice. 

(6) A case where the trustees under a will transferred stock in excess 
of their authority and used the proceeds for their own benefit, and the 
corporation permitting the transfer of its stock was held chargeable with 
a knowledge of the contents of the will which was spread on the public 
records, and was required to make good to the trust estate the value of 
the stock. 

(c) A case where stock held by executors under a will transferred 
same to themselves as trustees, and afterwards to "A. B., Trustee," the 



82 Volume I, pp. 418, 497 and 609. 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 351 

latter selling the stock and using the proceeds for his own purposes. In 
an action to recover the Court of Appeals (of Maryland) answered the 
plea of the defendant corporation that the mere word "trustee" gave 
them no notice of the trust, by holding that having been once informed 
of the will and its provisions affecting the stock in question, that knowl- 
edge continued all the way down, and the company was bound to see that 
the trust property in their custody was protected and not misappropriated, 
and required it to make good the loss. 

(d) A case where a transfer on the order of an executor caused loss 
to a corporation because the executor had not complied with the law of the 
testator's domicile before selling the stock so transferred. 

Mr. Perry further shows that where stock is transferred to a trustee, 
executor, administrator or guardian in an investment of trust funds, the 
corporation permitting such transfer of its stock may be held liable in 
case such investment of trust funds is against positive prohibition of law. 

It must be evident, without further discussion of this topic, upon 
which volumes have been written, that the corporation which transfers its 
own stock is subject in the matter of such transfers to very grave re- 
sponsibilities. 

Responsibiltty op the Separate Transfer Agent. 

How much of this responsibility does the trust company — or any other 
separate transfer agent — assume? Is the relation between the issuing 
corporation and the transfer agent that of simple agency, and the re- 
sponsibility of the agent limited to the exercise of good faith and ordi- 
nary skill and carefulness ; or does the agent, in assuming the duties con- 
nected with the transfer of stock, also assume all of the responsibilities in 
connection with such transfers that the issuing corporation Would itself 
have if no separate transfer agent were appointed? This is a question of 
most vital importance to the trust company — a question concerning which 
opinions differ widely, and upon which the courts have not passed. 

Those who incline to the opinion that the courts may hold the transfer 
agent liable for more than simple agency call attention to the causes which 
have brought about the employment of separate transfer agencies, to the 
purposes which they now serve and to the possible liability to two par- 
ties — the issuing corporation and the interested public. Recognizing the 
fact that convenience and the demands of business were potent factors in 
establishing the custom, they maintain that the demand of the public for 
additional safeguards, outside of any that the issuing corporation itself 
could furnish, was an important factor, and is to-day perhaps the strongest 
single reason why a corporation wishing to market its stock must have 
the same transferred by a responsible bank or trust company. They show 
that the stock exchanges generally require the appointment of such agen- 
cies as a prerequisite to the listing of the stock, and that the public would 
regard the omission of the appointment of a transfer agent as suspicious 
and irregular. They argue that it is evident that the general public looks 
upon the transfer agent as practically a guarantor, separate and aside 



352 TRUST COMPANIES. 

from the issuing corporation, that a certificate of stock bearing its signa- 
ture is absolutely valid, and that the holder will be protected by it; and 
they think it a fair question whether the courts, when a test comes, will 
not hold to the public's view of the case. As between the principal and 
agent, they point to the fact that one of the contributing reasons for the 
agency from the standpoint of the former is the supposition that the trust 
company is an expert in such work, possessed of superior facilities and 
endowed with thorough knowledge of the law, and therefore to be held 
accountable for more than ordinary skill; also to the fact that the prin- 
cipal ordinarily surrenders to the agent the entire control of the transfer 
of its stock, thereby placing beyond its own reach any power to prevent 
improper transfers, except of course in a few cases in which it may have 
special knowledge and instruct the agent. 

" . . . In view of the causes which have resulted in the office and 
custom, and of the practically absolute control exercised in most instances 
by the agent, it is certainly prudent for us to anticipate that the courts 
will decide, when a proper case is presented, that the agent is responsible 
to its principal in the full measure of the consequences resulting to the 
principal for any acts of the agent. . . . Can it be successfully ar- 
gued that, while the agent agreed to perform the work, and accepted a 
cash consideration therefor, the responsibility for the consequence of 
mistake, however innocent, impliedly remains where it formerly rested, 
upon the principal, it having parted with the control of the situation? 
I apprehend not." 83 

"The office not being a creation of the corporation by reason of any 
inability on its part to perform the duties involved, but being rather a 
system which custom and stock exchange rules have forced upon it, there 
is reasonable ground for query as to whether the agent, intervening as it 
does between the corporation and the public, does not stand for the cor- 
poration in its relation to the public, and itself assume the liabilities for 
a careful and responsible handling of the stockholders' interests, for 
over-issues, and fraudulent issues of stock, and for the many other forms 
of fraud, the liability of which would fall on the corporation did it per- 
form these functions for itself. ... In this state of the law, then, 
forecasts as to how the courts will act on this question when it comes up 
for direct decision are largely speculative ; . but the trend of decisions 
which touch the borders of the matter, and the application of established 
legal principles, would seem to indicate that the agent's liability to the 
interested public will be settled as is its liability to the corporation for 
which it acts; that the injured party may look successfully for reim- 
bursement to either the agent or the corporation or both." 84 

Those who hold to the opposite opinion are quite as decided in their 
views, and are perhaps more numerous. Their position is stated by Philip 
S. Babcock, as follows ("Trust Companies" magazine, Vol. I. p. 39) •' 

"I contend that the transfer agent is an agent, pure and simple; re- 
sponsible for gross and wilful neglect, but in other respects simply repre- 



83 Henry J. Bowdoin, Proceedings Trust Company Section 1896-1903, p. 188. 

84 Charles A. Greene, in "Trust Companies" magazine, Vol. Ill, pp. 12, 13. 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 353 

senting its principal; and any claims against the agent are properly ans- 
wered by interposing the principal." 

Speaking of the liability to the principal, Felix Rackemann says in 
Proceedings Trust Company Section American Bankers' Association, 
1896-1903, p. 62: 

"Lawyers and surgeons hold themselves out as competent and learned 
and skillful. Should either make a mistake from failure to properly 
apply some settled principle of his profession, he would be negligent. 
On the other hand, either might advise or act according to his best 
judgment in respect of some doubtful or unsettled point, and though in 
the end proved wrong, would not be guilty of negligence. So with the 
transfer agent. He is not an insurer and is not to be held to infallibility. 
He must, however, be cautious and vigilant. For an honest mistake in a 
matter where the law was unsettled, and in the absence of judicial deter- 
mination fairly open to different opinions as to true construction, it is 
hardly conceivable that the transfer agent could be liable to the company." 

The same writer says regarding liability to the public (page 66) : 

"There seems to be no ground whatever in the law for thinking that 
a trust company, acting as transfer agent, sustains toward the share- 
holder of the stock company any different legal relations than would 
exist between the shareholder and a small salaried clerk in the office of the 
company signing the same certificate as 'transfer clerk.' ' 

After calling attention to the fact that formerly this work was done 
by such transfer clerks, Mr. Rackemann continues: 

"It was never suggested that such transfer clerk 'represented' any- 
thing or was legally liable to anybody, so he conducted himself honestly. 

It would make no difference in the law whether the clerk under 
the old practice has signed himself clerk or agent. The only changes 
made under the modern system are that the word 'agent' has displaced 
the word 'clerk' and financial institutions of character and reputation 
have displaced the individual unfamed clerks. . . . The argument 
to the contrary must rest upon the theory that the signature of the trans- 
fer agent is to be treated as an authentication by one who has contracted 
with the company and impliedly undertaken with each investor that 
only true and perfect instruments shall be authenticated, and although it 
must be admitted that the agent's signature is required on the instrument, 
yet it must at the same time be remembered that the object of the added 
signature has not been to gain added authenticity. The necessity for 
the agency led to the signature. It was not the desire for the signature 
as an authentication which led to the agency. A railroad ticket is not 
good until the agent has put his office stamp and date upon the back. 

If a ticket proves bad and be rejected, would it be claimed by 
any one that the agent was individually liable because he had 'authenti- 
cated' the ticket, or personally represented anything whatever about it in 
the act of stamping it? It is not easy to see any distinction between the 
two cases." 

Mr. Rackemann adds that in his discussion he has been referring 
"Only to those cases where there is merely the signature of the trust 
company, and the words 'transfer agent.' It may well be that the addition 



354 TRUST COMPANIES. 

of some very simple and harm] ess-sounding words will lead to very impor- 
tant, further and different results." He particularly warns against the 
use of the word "countersigned/' calling attention to the fact that "It 
has been held in at least two cases that the execution of an instrument 
under the word 'countersigned' was equivalent to a direct and positive 
representation, not only that each original signature was genuine, but that 
every legal formality essential to the full legal effect of the instrument 
had been duly observed and performed." 

Methods of Safeguarding the Transfer Agent. 

Whatever view may be taken of the situation, it is evident that it is 
possible that the liability of the transfer agent might be held greater than 
trust companies acting in that capacity intend it to be, and that wisdom 
would dictate the taking of all possible measures to prevent such a possi- 
bility. A committee on the subject appointed by the Trust Company 
Section of the American Bankers' Association reported (Proceedings 
Trust Company Section 1905, pp. 6 and 7) : "While the trust companies 
do not admit that in acting as transfer agent or registrar they assume 
any such measure of responsibility as that suggested by articles read be- 
fore the convention at various times, it would be desirable to eliminate 
absolutely the opportunity for any claim that the trust company serving 
in either capacity is liable save as an ordinary agent. Obviously, there 
are but two ways in which liability can be defined in advance; either by 
agreement between the principal and agent or by legislation. The latter 
was recommended in the article under consideration, since a statute would 
as clearly affect the investing public as the company issuing the stocks 
transferred or registered. The form proposed for New York was as 
follows: * * * (The trust company shall have power) 'To transfer, 
register and countersign certificates of stocks, bonds and other evidences 
of indebtedness of corporations, with liability to such corporations and to 
the owners or holders of such certificates of stock, bonds or other evi- 
dences of indebtedness solely for the negligence or wilful misconduct of 
its officers in reference to such certificates of stocky bonds or other evi- 
dences of indebtedness, or in the appointment or employment of its 
agents, clerks or employees dealing therewith/ 

If in any state it shall not be possible or convenient to obtain legisla- 
tion of the character indicated then such protection as may be afforded 
by the adoption of appropriate endorsements is recommended." 

The form of endorsement, or certificate of transfer agents, recom- 
mended in this report has already been given. 85 

Other forms of protection that have been suggested are the taking of 

.bonds of indemnity in doubtful cases, the making of special contracts for 

the agency and notifying all transferees of such contract, and having the 

transferees subscribe to the by-laws of the issuing company in cases where 

such by-laws define the responsibility of the transfer agent. 

85 Pag-e 347. 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 355 

The following "Suggestions about Stock Transfers" issued by the 
Old Colony Trust Company of Boston, and used here with its permission, 
contain valuable hints regarding the conduct of this business: 

"Suggestions About Stock Transfers. 

1. Signatures of stockholders on stock transfers, when unknown, 
must be verified in some way satisfactory to the transfer agent. This 
will usually be by guarantee of some member of the Boston Stock Ex- 
change or some well-known bank, or by acknowledgment before a notary 
public. 

2. If the holder's name is rightly given on the face of the certificate, 
he or his duly authorized attorney should sign the transfer exactly as the 
certificate is made out, without alteration or enlargement. 

3. If an error was made in issuing the certificate, the transfer agent 
should be informed of the facts. Do not make corrections on the face 
of the certificate. If the assignment is filled out erroneously, alterations 
should be made in ink only, leaving the original writing legible. Do not 
use erasers of any sort. 

4. Enter in the transfer space on the back of the certificate the full 
name of each person to whom the stock is to be assigned, writing out the 
number of shares to be so transferred, and the street or post-office ad- 
dress of the transferee. It is more convenient to leave the attorney space 
blank, if one is provided. 

5. In transferring to individuals, use the full Christian name; and, 
if the transferee be a woman, the title "Miss" or "Mrs." Avoid using 
diminutives. 

6. In transfers to a married woman, use her own Christian name, not 
her husband's. In case of a change of name by marriage, send the stock 
certificate to the transfer agent with the transfer filled out to the correct 
name, signed after this manner, — "Mrs. Mary James, formerly Mary 
Jones," having the signature properly verified. 

7. Assignments to a corporation or association should give the com- 
plete legal title. 

8. Certificates issued to a minor or an insane person should bear 
the guardian's name; for example, "John Jones, minor (or incompetent), 
under guardianship of Henry Jones." If a transfer is desired of stock 
so held, a recently certified copy of the guardian's appointment should 
be shown, together with the license of the court appointing the guardian, 
if such license is necessary under the laws of the state having jurisdiction. 
Termination of the guardianship should be shown by a certificate from 
the court, birth certificate, or other satisfactory evidence. 

9- On certificates issued to trustees the trust must be fully described, 
exact reference being made to the will or other document creating the 
trust; and, whenever possible, the name of the beneficiary should be 
given. 

10. Transfers by trustees, where a power of sale is not granted by 
the instrument creating the trust, cannot be made without license from the 
court or the consent of all the beneficiaries. In every case the instru- 
ment creating the trust and proper evidence of the trustee's appointment 
should be exhibited. If there is more than one trustee, all must sign 
transfers. 



356 TRUST COMPANIES. 

11. Transfers made by administrators or executors must be accom- 
panied by a recently certified copy of court appointment. When made 
by executors or adminstrators with the will annexed,, of estates which have 
been in probate over three years, a certified copy of the will should be 
shown. If there is more than one administrator or executor, a majority 
should sign. 

12. Trustees, administrators, executors, guardians, and attorneys 
should not transfer to themselves individually; nor should husband and 
wife transfer directly from one to the other, unless such transfers are 
authorized by the laws of the state when the transfer is signed. 

13. Transfers from corporations or associations should be executed 
by their officials duly authorized for the purpose, and accompanied by a 
certified copy of the vote or by-law authorizing the transfer. Such 
vote or by-law should be certified to by an official other than the one 
signing the transfer. 

14. Transfers by attorney must be accompanied by the original or 
a notarial copy of the power of attorney, and evidence should be given 
that the signature is genuine. Powers of attorney can be recognized only 
when the intent of the maker to authorize transfers is beyond doubt, and 
when the power is recent, or is shown to be still in force. 

15. Papers left for record in connection with transfers by trustees, 
executors, etc., will be returned. 

16. Prompt notice of any change of address should be given the 
transfer agent in writing, stating the name of the company in which 
stock is held. 

17. If a certificate is lost, file notice to that effect with the transfer 
agent at once, giving, if possible, the certificate number and number of 
shares. 

18. In transfers of stock in Massachusetts corporations by foreign 
executors, administrators, or trustees, evidence should be furnished that 
the transfer is not liable to the Massachusetts collateral inheritance tax, 
or that such tax has been paid. 

The foregoing suggestions are subject to change, and should be con- 
sidered for guidance only." 

The following general rules written by Frederick Vierling, Trust 
Officer The Mississippi Valley Trust Co. of St. Louis, also contain valu- 
able suggestions: 

"General Rules for Issue of Certificates of Stock. 

(1) To a man, issue in his name, giving his first name in full and 
not merely his initial; (2) to two or more persons, issue in their full 
names, unless a firm; (3) to a woman, issue in her name, giving her 
first name in full — and make record as to whether she is married or 
unmarried — the issue to a married woman to be in her own name and 
not that of her husband: i. e., Evelyn M. Blank, not Mrs. Frederick 
Blank; (4) to a co-partnership, issue in firm name; (5) to a corpora- 
tion, issue in corporate name — first requiring proof that corporation is 
authorized to hold shares in issuing company; (6) do not issue to any 
sole or joint fiduciaries acting under order of court, unless they first 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 357 

produce certified copy of order of court showing their authority to take 
and hold shares; (7) do not issue to any sole or joint fiduciaries acting 
under written instrument, unless they first produce the instrument or a 
certified copy, and unless under the instrument or the law relating to such 
trusts they have authority to take and hold the shares — if a recorded 
instrument keep reference to record, and if not recorded require certified 
copy for files; (8) do not issue to a fiduciary or to fiduciaries merely 
as such (as A. B. trustee), but issue to an authorized sole fiduciary 
or to joint fiduciaries in their names in full, followed by full designa- 
tion of their trusts — i. e., A. B., administrator of estate of C. D., 
deceased; A. B., executor under will of C. D., deceased; A. B., guardian 
of C. D.. a minor; A. B., trustee for C. D., under will of E. F., de- 
ceased; A. B., trustee for C. D., under indenture of trust with him dated 
March 1, 1907; A. B., agent for C. D., under agency agreement with 
him dated March 1, 1907; (9) no certificate should be issued to any 
fiduciary, unless appointed by order of court or in writing. 

General Rules for Transfers of Certificates of Stock. 

(1) Require surrender for cancellation of outstanding certificate 
representing shares to be transferred; (2) require execution of assign- 
ment and power of attorney on back of certificate to be transferred or 
have properly executed form attached, the signature or signatures to be 
in the exact name or names as written on face of certificate, and must 
be by the principals themselves or by their legal representatives formally 
appointed by order of court or in writing; (3) if signature to assign- 
ment is not known, require same to be acknowledged before a notary 
public, or better still, have it guaranteed by some responsible person 
or persons who are known; (4) require assignment of certificate issued 
to a firm to be executed in the name of the firm by a general partner; 
(5) require assignment of certificate by a corporation to be executed 
by its president or a vice-president under corporate seal, attested by its 
secretary or assistant secretary, and accompanied by a certified copy of 
by-laws showing authority of officers or certified copy of resolution of its 
directors authorizing the officers named to assign certificates; (6) where 
there are joint fiduciaries, require all of the acting fiduciaries to join 
in the assignment; (7) where assignment of certificate is by a fiduciary 
or fiduciaries acting under order of court, require certified copy of 
order of court giving authority to make transfer; (8) where assign- 
ment of certificate is by a fiduciary or fiduciaries acting under written 
instrument, require production of instrument and examine carefully and 
see if authority to make trsnfer is clearly given, and if not require in 
addition order of court authorizing the transfer and place certified copy 
on file — if the instrument is recorded, keep reference to record and if 
not recorded require certified copy for files; (9) require proof that any 
fiduciary making an assignment of a certificate is at the time still acting 



358 TRUST COMPANIES. 

as such fiduciary; (10) transfers by fiduciaries to themselves should not 
be allowed, unless at the time they are sole beneficiaries of the trust and 
the trust is terminated, or unless specifically authorized by order of 
court or terms of instrument creating the trust." 

For a fuller discussion of this subject, see list of articles given in 
note at heading "Liabilities as Transfer Agent." 

Duties and Liabilities as Registrar of Stock. 

The duty of the registrar of stock is to register, or record the issue of, 
certificates of stock after they have been issued by the transfer agent, for 
the purpose of preventing an over-issue of such stock. Before assuming 
its duties the registrar must be furnished with authentic information as 
to the total amount of stock authorized to be issued, if none has been 
issued; or as to the total amount of stock authorized to be issued and the 
amount outstanding, if part or all has been issued. After the total 
amount of shares authorized to be issued have been registered, new cer- 
tificates are not registered except upon the cancellation of outstanding 
certificates for the same number of shares. 

As stated by Felix Rackemann, in Proceedings Trust Company Sec- 
tion 1896-1 903, p. 73, "In practice the registrar keeps its registry list, 
and as stock is transferred by the company or its transfer agent it re- 
ceives in each case the old certificate as surrendered and the new certificate 
as prepared to take its place, it compares the two, it notes upon its reg- 
istry list the surrender and cancellation of the old and the issue of the 
new in substitution, and it thereupon identifies the new certificate by its 
signature upon its face as a part of a stated authorized issue." 

Upon its face this is an exceedingly simple operation, involving no 
greater responsibility than a guarantee that the certificate has been issued 
in regular form by the transfer agent and that the outstanding registered 
stock of which it represents a part does not exceed the total authorized is- 
sue. This is the limit of responsibility which a trust company in assuming 
the office of registrar intends to assume, and which many think the courts 
will rule it actually does assume. Yet there are a number of lawyers and 
trust company officials of experience who incline to the opinion that as in 
the case of the transfer agent, the courts may, when a case actually comes 
before them, hold the company acting as registrar to liability for inciden- 
tal and implied obligations which it has not intended to assume — some 
going so far as to believe that "The duties and liability of a registrar do 
not differ in any marked degree from those of a transfer agent." 80 

As to the historical origin of the office of registrar and the original 
and present purpose of its employment, there seems to be no disagree- 
ment. The practice of employing registrars was a result of the disclos- 
ure in 1863 of the "Schuyler Frauds," in which Robert Schuyler, who 
was president and also transfer agent of the New York and New Haven 



86 Henry J. Bowdoin, Proceedings Trust Company Section 1896-1903, p. 194. 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 359 

Railroad Company, fraudulently over-issued the stock of his company. 
As a safeguard against such frauds in the future, the New York Stock 
Exchange, in January, 1869^ adopted a rule requiring all active stocks to 
be registered by an agency approved by it. "The danger of over-issue 
was, therefore, the single operating cause. To guard against such danger 
was the single object of the Stock Exchange rule, and of the subsequent 
practice adopted in compliance with that rule." (Rackemann, as above, 
p. 72.) 

It is evident that the function of the registrar could not in any case 
be exercised, as the function of the transfer agent could be, by the issuing 
corporation. The very nature of the office requires the services of a per- 
son or corporation entirely distinct from the company whose stock is to 
be registered. 

The liabilities involved are at the present purely a matter of opinion, 
as there is practically no law on the subject. The position of those who 
believe that the liabilities involved may be considerable is illustrated in the 
following passage (Bowdoin, as above) : 

"Since the function to be performed by the registrar, which it holds 
itself out as competent to discharge, is that of a check against the trans- 
fer agent, in guarding against an over-issue of stock, it becomes necessary 
for the registrar to scrutinize all transfers, since the issue of a certificate, 
except against one legally cancelled for the same number of shares, 
would necessarily result in an over-issue. This duty the registrar im- 
pliedly, by its acceptance of the office and fee, agrees to discharge. 
Obviously, if the registrar certifies the issuance of a certificate, thereby 
placing upon it the last and highest indicia of validity, and loss results 
to the principal therefrom, the registrar has failed to fulfill the purpose 
of its appointment; if, by such action, loss enures to a stockholder whose 
property rights have been wrongfully divested thereby, cannot such stock- 
holder recover from the registrar, the signature of the latter in acceptance 
and approval of the evidences of the transfer being essential to the trans- 
fer and being the last act in consummation of the transaction by which 
the stockholder is injured? In the absence of an expressed agreement 
limiting the liability of the registrar, it would seem that the acceptance 
of the office carries an acceptance of responsibility for failure to properly 
perform the functions of the office, and that unless such limitation of 
liability is brought to the knowledge of the stockholder, and of those who 
may from time to time become such, the acceptance of the office would 
also imply an acceptance of responsibility for all acts of the registrar 
whereby the stockholder is wrongfully deprived of his property interest 
in the stock. Here again the case against the registrar is strengthened 
by the quite customary regulations of stock exchanges requiring the sig- 
nature or counter-signature of a registrar as essential to the validity of 
the certificate." 

Referring to the fact that the word "Registrar" appears in the opinion 
of some to be the equivalent of "Guarantor," Mr. Rackemann says (as 
above, p. 72) : 

"It is certainly a matter calling for consideration, because a popular 
notion, or conviction, though erroneous, is yet quite apt to have its natural 



360 TRUST COMPANIES. 

effect upon the judicial mind/' and he suggests the avoidance of the word 
"Registrar," suggesting in its place "Agent to Register Transfers." 
He says further (p. 74, as above) : > 

"If the registrar of stock by the registration, makes a continuing 
representation to the public that the stock is valid and properly issued, 
or even within the authorized limit, the registrar is of course concerned 
to know that each transfer is properly made and not merely that a former 
stock certificate is mutilated in the process known as cancellation. Be- 
cause it may well be that a stock certificate, mutilated in cancellation to 
the satisfaction of the most fastidious, would still remain as a matter of 
law a perfectly valid stock certificate upon which the shareholder named 
therein would continue to have all original rights and claims. 
Should the transfer agent, therefore, accept an old certificate and 'punch' 
it in cancellation without the authority properly given by the true owner, 
it would not be cancelled, and any stock certificate put out by the trans- 
fer agent in its place would be an over-issue, and the registrar, in sign- 
ing the new certificate, would be registering over-issue stock." 

Answering his own question, "What does such registration mean?" 
Noble B. Judah says (Proceedings Trust Company Section 1904, p. 85) : 

"To my mind, the answer to this question is that such registration 
means and intends more than simply that the trust company, as agent 
for the company the stock of which is registered, has written some words 
on the certificate. It has been said in the past that the trust company 
simply acled as the agent for the other company, from time to time, in 
registering the respective certificates; and it seems to have been assumed, 
sometimes at least, that the trust company was under no responsibility 
to the person taking the registered certificates ; but the company whose 
stock is registered has, if its affairs are honestly administered, no need 
on its own part for such registration. Obviously the chief purpose is to 
give the purchaser of the stock to understand that a third and disin- 
terested party is looking after the stock issues. I do not doubt that the 
courts of some of the states, at least, will so hold. As soon as it is ad- 
mitted that the registration is procured for the purpose of influencing 
third parties, it is very necessary that their rights be considered, for in 
such case there will be, sooner or later, decisions holding the registrar 
to financial responsibility." 

That there are many who do not agree with these views is shown by 
the practice of different companies in the method of conducting the work 
of registration, and by opinions expressed in printed articles. Thus, 
Willard V. King says ("Trust Companies," Vol. 2, pp. 416-418) that 
"We all do in New York" register stock "without looking into the formal- 
ity of the transfer." Referring to the contention that if the transfer 
agent improperly cancelled a certificate and issued a new one the share- 
holder whose stock was illegally transferred could compel the transfer 
agent to reissue to him the shares illegally taken from him, thus produc- 
ing an over-issue, he says : 

"But the answer to this is that the transfer agent, if compelled to 
make good in such a way, would go into the market and buy the necessary 
shares and cancel them in order to make the required issue to the ag- 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 36l 

grieved stockholder. He could not issue them out of hand. It is quite 
inconceivable that there should be at any instant more stock outstanding 
than the corporation had authorized, the proper hypothesis being that the 
transfer agent (assuming that his guilt has been proved) is 'short/ just 
exactly like a speculator who has sold what he does not own, and is put 
to the necessity of buying the wherewithal to fulfill his obligations. There 
would be no over-issue at any stage of the proceedings, and therefore 
nothing for the registrar to concern himself about." 

Again, he says: 

"Moreover, on examination of the details of the procedure it will be 
found that the registrar has not the facilities for proving the propriety 
of the assignments. When a new stock certificate is delivered, the trans- 
fer agent takes the receipt, which in many cases is the only specimen 
on file of the new stockholder's signature. To this the transfer agent 
can refer by way of added verification of that signature when in the 
course of time the certificate is presented for transfer; but the registrar 
has not access to it. Powers of attorney, probate certificates, copies of 
deeds of trust, and other papers showing the authority of various persons 
to execute assignments of stock, are lodged with the transfer agent; and 
to suppose that the registrar must keep a duplicate file, or must examine 
the papers already accepted by the transfer agent, and require a second 
examination by counsel of the doubtful cases, is quite absurd." 

Mr. King objects to the phrase "Countersigned and registered" on 
certificates, "because the word 'countersigned' is likely to imply something 
in addition to 'registered.' " 

The remedies proposed by those who think the situation serious enough 
to justify caution are practically the same as those already explained for 
the protection of companies acting as transfer agents. Even those who 
hold to the opinion of limited liability agree that it is important to ex- 
ercise great care in the form of the Registrar's certificate. The Commit- 
tee of the Trust Company Section, American Bankers' Association, al- 
ready mentioned, recommends 87 either of the following forms: 

"Registered this day of 

Trust Company, as Registry Agent." 

"Registered this day of 

Trust Company, as Registration Agent." 

The duties and liabilities of trust companies as registrars of stock are 
more fully discussed in the list of articles given in the note to the heading, 
"Liabilities as Transfer Agents." 

Trustee Under Bond Issues. 

When one wishes to borrow upon mortgage security a compara- 
tively small amount, such as he may obtain from a single lender, the 
loan may be negotiated upon a single note and mortgage. If, how- 



87 Proceedings Trust Company Section 1905, p. 7. 
24 



362 TRUST COMPANIES. 

ever, a corporation wishes to borrow a sum running into hundreds of 
thousands or millions of dollars, it must look to a number of different 
investors to furnish the money, and must supply a corresponding num- 
ber of notes or evidences of indebtedness, each of which must be secured 
by mortgage. It is manifestly impracticable to furnish each investor 
with a separate mortgage; and hence there has grown up the custom of 
issuing a single mortgage securing a number of separate notes or bonds, 
of amounts (usually $1000 or $500) which are within the reach of the 
average investor. It then becomes necessary to select some one person or 
corporation to whom, as trustee, the mortgage may run in trust for the 
several bondholders, and who may identify the bonds issued upon the 
security of such mortgage. For these trusteeships the trust company has 
manifold qualifications, and has come to be generally used. What are its 
duties and liabilities when acting in this capacity? 

In the simplest case of such a trusteeship, if the issuing corporation 
meets its obligations promptly and regularly, the duties of the trustee 
may be no more than the holding of the mortgage as trustee, the certifi- 
cation of the bonds, and, at maturity, the satisfaction of the mortgage 
and cancellation of the bonds. In many cases, however, the duties of 
the trustee at the outset and during the life of the bonds are more exten- 
sive, while in any case the failure of the issuing corporation to comply 
with the terms of the mortgage will impose added burdens upon the 
trustee. 

When the trust has been accepted the mortgage conveying title to the 
trustee in trust for the holders of the bonds is recorded, the seal of the 
corporation and the signatures of its proper officers are placed upon the 
bonds, and the latter are delivered to the trustee for certification. Before 
the mortgage is executed or the bonds engraved both documents should 
be submitted to the trustee for examination and approval by its attor- 
ney. He should see to it that the descriptions of the property to be 
mortgaged are definite and plain, and that the duties, limitations and 
liabilities of the trustee are set forth in the mortgage clearly and fully. 
Upon receipt of the bonds the trustee examines each bond with care to 
see that all are in complete condition, properly signed and sealed, that 
the number of the bonds is correct and that their wording is according 
to the form which should be given in full in the mortgage. Having 
satisfied itself of these things, the trustee has its secretary sign the 
trustee's certificate on each bond, and is then ready to deliver the bonds 
according to the provisions of the mortgage. 

The conditions to be inserted in the mortgage for the definition of 
the trustee's liability demand careful thought. The following are sug- 
gested by a Committee of the Trust Company Section, American Bank- 
ers' Association, 88 and will be found very useful as guides: 

"As a condition precedent to the acceptance of the said trust by the 
trustee it is further stipulated and agreed by and between the parties 



Proceedings Trust Company Section 1905, pp. 7-9. 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 363 

hereto and all present or future holders of bonds secured by these pres- 
ents, that the trustee shall not be answerable for any act, default, neglect 
or misconduct of any of its agents, representatives or employees, by it 
appointed or employed in connection with the execution of any of the 
said trusts, nor in any other manner answerable or accountable under any 
circumstances whatsoever, except for gross negligence or bad faith; that 
the recitals contained herein, or in the bonds, as to priority of lien, due 
authorization or any other matter whatsoever, are made by and on the 
part of the company, and the trustee assumes no responsibility for the 
correctness of the same; also, that it shall be no part of the duty of the 
trustee to file or record this indenture, mortgage, deed of trust, assign- 
ment or other instrument whatsoever that may be delivered to it under the 
terms of this instrument as a mortgage, deed of trust or conveyance of 
real estate, or as a chattel mortgage or conveyance of personal property, 
or to renew such deed of trust or mortgage, real or personal, or to pro- 
cure any further, other or additional instrument of further assurance, or 
to do any other act which may be suitable and proper to be done for 
the continuance of the lien or charge hereof, or for giving notice of the 
existence of such lien or charge, or for extending or supplementing the 
same; nor shall it be any part of its duty to effect insurance against fire 
or other damage on any portion of the premises or property hereby mort- 
gaged, or to renew any policies of insurance, or to keep itself informed 
as to the pa}^ment of any taxes or assessments, or to require such pay- 
ment to be made; but the trustee may do any or allof these things. 

The trustee shall not be compelled to take any action as trustee under 
this mortgage unless first properly indemnified to its full satisfaction, 
nor shall it be chargeable with notice of any default on the part of the 
company except upon delivery to it of a distinct specification in writing 
of such default bj' some person or persons interested in the trust, whose 
interest, if the trustee shall require, must be proved to the reasonable sat- 
isfaction of the trustee. 

In case at any time it shall be necessary and proper for the trustee 
to make any investigation respecting any fact or facts preparatory to 
taking or refraining from taking any action, or doing or not doing any- 
thing, as such trustee, the certificate of the company under its corporate 
seal, attested by the signature of its president or secretary, or the affi- 
davit of one or more directors, shall be conclusive evidence of such facts 
to protect the trustee in any action or position that it may take or assume 
by reason of the supposed existence of such facts. 

It is further covenanted and agreed that the trustee under this deed 
of trust is, and shall be, entitled to reasonable compensation for all ser- 
vices rendered hereinunder, or in connection with the trust, which com- 
pensation, together with any and all necessary and reasonable expenses, 
charges, counsel fees and other disbursements incurred by the trustee 
in the discharge of his duties as such, shall be paid by the company or out 
of the trust estate upon which they are hereby made a lien and charge 
superior and prior to those of the bonds secured hereby. 

The trustee shall be protected in acting upon any resolution, notice, 
request, consent, certificate, affidavit, voucher, bond or other paper or doc- 
ument believed by it to be genuine and to have been passed or signed by 
the proper party. 



361 TRUST COMPANIES. 

Every trustee hereunder may at any time resign from the trust by 
mailing, at least sixty days before such resignation shall take effect, a 
duly addressed notice in writing to that effect to the company, and to all 
bondholders who may be known to the trustee to be such, and whose ad- 
dresses shall likewise be known to it." 

The form of the trustee's certificate should likewise be worded with 
care to avoid the incidental assumption of responsibility which the trus- 
tee does not intend to assume. For example, it has been held that the 
statement in the certificate that the bond is "secured" by the mortgage 
therein referred to may commit the trustee to a guaranty that the bond 
actually is secured. The committee already referred to suggests the fol- 
lowing form for the trustee's certificate: 

"It is hereby certified that this bond is one of the series of bonds 
mentioned and described in the mortgage or deed of trust herein re- 
ferred to. 

Trust Company, as Trustee, 

By Secretary." 

The provisions for the delivery of the bonds after certification vary 
greatly. Sometimes all of the bonds are to be delivered to the issuing 
corporation at once upon the recording of the mortgage; often some of 
them are to be withheld to take care of underlying bonds, or, as in the 
case of a railroad construction mortgage, the bonds are to be delivered in 
installments as the work progresses. Occasionally the entire issue is to 
be held in the custody of the trustee until the completion of certain work, 
or the fulfillment of certain conditions. When any conditions are at- 
tached to the deliver}' of the bonds, the mortgage should be absolutely 
clear as to the conditions, and should specify the evidence to be required 
that such conditions have been fulfilled. The responsibility of the evi- 
dence is ordinarily put upon the issuing corporation, the trustee being 
liable only for the exercise of good faith. 

After delivery of the bonds the trustee may be called upon to perform 
various duties, depending upon the terms of the mortgage and the char- 
acter of the property. If provision is made for the accumulation of a 
sinking fund, the trustee may have divers duties in that connection. The 
trustee's powers may include that of releasing portions of the property 
from the lien of the mortgage. In the case of collateral trust bonds — 
which are practically long-time collateral notes — the mortgaged property 
consists of bonds and stocks, and the trustee may be called up to pass 
upon securities offered in substitution. Outside of its regular duties as 
trustee, the trust company may perform various services as fiscal agent. 

The management of a sinking fund involves varying degrees of re- 
sponsibility. Often the funds received are to be used for the retirement 
of a certain number of the outstanding bonds each year, according to the 
provisions contained in the mortgage which secures the bonds. Some- 
times the particular bonds to be retired are selected by lot, and the 
result is advertised in the daily papers. Whether they are presented 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 365 

for redemption or not. they cease to draw interest at the period adver- 
tised. The bonds thus redeemed are often not cancelled, but are held 
by the trustee under the mortgage, and interest on them is added to the 
sinking fund for the further purchase of bonds. In the absence of 
provision for the retirement of bonds as above stated, they are some- 
times to be purchased in the open market from the sinking fund. Occa- 
sionally the sinking fund is to be invested in other securities, either 
according to stipulated conditions or at the discretion of the trustee or 
the directors of the corporation. 

In case of default by the issuing corporation the trustee may find it 
necessary to foreclose the mortgage and sell the property. Not infre- 
quently various interests among the bondholders institute proceedings 
which of necessity involve the trustee and add to its duties; and in any 
case the trustee is obligated, within the limits which should be carefully 
laid down in the mortgage, to protect the interests of all bondholders 
alike. If a receiver for the corporation is appointed, and application 
made for the issue of receiver's certificates to be prior in lien to the bonds, 
the trustee for those bonds should, through its attorney, appear in court 
and look after the interests of the bondholders, either favoring or oppos- 
ing the issue of receivers' certificates as the welfare of the holders of 
the bonds may dictate. For all special services the trustee is of course 
entitled to reasonable compensation, the fees agreed upon at the start 
covering only the routine duties, of which the chief is the certification 
of the bonds. 

Regarding the liability incurred in the certification of bonds there 
are some differences of opinion, which concern chiefly the moral rather 
than the legal responsibility of the trustee. So far as the trustee is con- 
cerned the certification is intended for no more than the identification 
of the bonds as being the particular bonds referred to in the mortgage, or 
deed of trust to which reference is made in said bonds. The trustee does 
not undertake to guarantee anything regarding the value of the property 
alleged to be behind the issue, regarding the title to the property, or 
regarding the regularity of issue, validity or priority of lien of the 
mortgage. It merely certifies that it has in its possession as trustee a 
mortgage issued by the corporation whose name appears therein, that the 
bond upon which its certificate appears is genuine, is one of the bonds re- 
ferred to in the mortgage, and that the number of such bonds certified 
by it is not greater than the number called for in the mortgage. In other 
words, the certificate intends only to identify the bonds and to prevent 
an overissue of them. 

Notwithstanding this very limited legal liability undertaken by the 
trustee, the company which accepts such trusts without a reasonably care- 
ful investigation runs the risk of having its reputation, and incidentally 
its business, seriously injured; and most companies recognize that their 
moral responsibility to the public requires care lest their names be al- 
lowed to appear in any connection with enterprises regarding the legit- 
imacy and good faith of which there appears to be any question. There 



866 TRUST COMPANIES. 

is of course no obligation on the part of the trustee to feel assured that 
the enterprise will be successful; that is a risk which the investor must 
take for himself, and besides, it may well be that enterprises which do 
not look promising to the trustee may meet with great success and be 
exceedingly profitable to the investors. But if an undertaking proves to 
have been from its very inception a "fake/' the trust company whose name 
appears upon the bonds as trustee is very certain to suffer in public esti- 
mation, no matter how innocent of wrong intention it may have been. 

The degree of care exercised and the particular matters investigated 
before accepting an appointment of this kind of course vary with dif- 
ferent companies. Some do no more than satisfy themselves that the 
undertaking is legitimate and that the men behind it are acting in good 
faith. They argue that for the meagre compensation received they can 
afford to do no more, that they are living up to the full measure of their 
contract; and further, that their doing more would tend to mislead the 
public. Those who go to the other extreme take pains to verify the cor- 
rectness of everything leading up to the bond issue, though not admitting 
legal responsibility for such verification. They satisfy themselves that 
the issuing corporation actually owns property which may be mortgaged 
(but do not attempt to pass upon the value of such property) ; that the 
title to the property is good; that the company has been properly incor- 
porated and that its acts leading up to the bond issue have been legal; 
that the mortgage is properly drawn, contains no glaring faults and actu- 
ally covers the property which it purports to mortgage. If it is stated in 
the bonds that the mortgage is a first mortgage, they take pains to ascer- 
tain that such is the fact. An instance of extreme care in this matter 
is found in the following list of papers required, prepared by Frederick 
Vierling, Trust Officer of The Mississippi Valley Trust Co., St. Louis, 
for the guidance of his company: 

" List of papers to be furnished Trustee in re Bonds to be issued; 
all papers to be certified under seal of Company. Copies of official docu- 
ments need not be certified by State officials, if Company certifies under 
seal that same are true copies of official documents and certificates 
thereto. 

1. Articles of Association. 

^. Certificate of Incorporation. 

3. All amendments to either of above, and minutes and documents 
in re changes of capital stock, or, if there have been no amendments, 
certificate to that effect. 

4. By-laws of Company. 

5. Minutes of stockholders electing present directors, with all ex- 
hibits. Attach certified list of stockholders with number of shares each. 

6. Minutes of directors electing present officers, with all exhibits. 

7. Certificate containing specimen signatures of officers who will 
sign mortgage, bonds and coupons. 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 367 

8. Minutes of stockholders authorizing mortgage, bonds and coupons, 
with all exhibits. 

.9. Minutes of directors approving action of stockholders in author- 
izing mortgage and bonds, with all exhibits attached. 

10. Opinion of attorney of Company as to its legal incorporation 
and existence and that proceedings authorizing mortgage, etc., were duly 
had according to law, also that form of mortgage, bonds and coupons 
are valid in form and when duly executed will be legal and binding 
obligations of Company. 

11. Certificate of title of regular abstractors showing that mortgage 
has been duly filed for record and is first lien on all property ; or in lieu, 
an abstract of title with opinion of attorney based thereon to like 
effect. 

12. Affidavit of President and two Directors of Company showing 
that property mortgaged at fair and reasonable value is at least as 
much as amount of bonds forthwith to be issued. 

IS. General inventory of tangible and intangible property, each 
separate. 

14. Financial statement of Company, showing assets and liabilities. 
Also, statement of earnings and expenses per year for past five years. 

15. Agreement of Company at least annually on demand of trustee 
hereafter to send statement as in .No. 14 and to furnish additional 
inventories, as in No. IS on demand of trustee. 

16. If principal owners of Company are not known to trustee, let- 
ters from responsible persons who are known, identifying owners. 

17. Letter from banker of Company as to its reputation for financial 
responsibility, etc. 

18. Certificate showing fact that each bond signed by officers of com- 
pany and the seal attached is signed in genuine handwriting of officers 
purporting to have signed same and that seal affixed is the corporate seal 
of the company. 

19- Copies of all existing franchises of company with certificate 
showing that all payments thereunder required have been made and that 
ether conditions thereby required of company to be kept have been per- 
formed. 

20. If mortgage has no specific provisions for delivery of bonds by 
trustee after authentication, resolution of directors authorizing certain 
officer or officers of company to receive bonds with specified coupons 
and give proper receipt. 

21. Copy of underlying mortgages with certificates as to outstand- 
ing bonds issued thereunder." 

Between the extremes there are companies which assume varying 
degrees of moral responsibility. Those who incline to put considerable 
stress upon the matter of the moral responsibility point to the fact that, 
however unjustified it may be in so doing, the public does actually attach 



368 TRUST COMPANIES. 

a great deal of importance to the trustee's certificate, and that the certifi- 
cate of a reputable trustee is a prerequisite to the satisfactory financing 
of a bond issue. It is a frequent occurrence for the bond seller to clinch 
his argument with the statement that the Blank Trust Company, a rep- 
utable concern, is trustee for the issue. Some companies, in their adver- 
tisements for this kind of business, point to the advantages, other than 
the identification of the bonds, gained by their trusteeship. For exam- 
ple, a large Eastern company says in a circular, "It adds very largely to 
the value of bonds issued by any corporation, that the proposed pur- 
chaser knows that the trustee named in the mortgage, which secures the 
payment of the bond he intends to buy, is a responsible corporation, 
which before assuming to act has through its counsel investigated the 
forms of the bond and mortgage and determined the validity of the pro- 
ceedings of the corporation which issued them. This relieves him from 
the necessity and expense of making such an investigation himself, and 
he is only obliged to determine in regard to the business value of the 
security itself." 

While opinions differ greatly, as already stated, the tendency appears 
to be towards greater care in accepting appointments as trustee under 
a bond issue. "In recent years the trust companies have shown a tend- 
ency, when acting as mortgage trustees, to recognize a greater moral 
responsibility than they at first were willing to bear. * * * A trust 
company which should now allow the issue of unsecured bonds because 
of some glaring defect in the language of the mortgage, would no longer 
be morally excused by financial opinion, though perhaps held technically 
innocent." 89 

It would seem to be to the interest of all concerned that the trustee's 
compensation be made large enough to enable it, not to guarantee the 
validity of the mortgage, but to be responsible for ordinary care in ascer- 
taining that the mortgage has been regularly issued by a properly incor- 
porated company, is a lien on property to which that company holds 
clear title, and contains reasonable provisions for the protection of bond- 
holders — in short, perform for the bondholders the services which the 
careful investor might expect of his lawyer, leaving to the bondholders 
the risk as to the business success of the undertaking, together, of course, 
with the risk of legal defects in the instruments which ordinary care on 
the part of the trustee has not detected. Such a course would not only be 
a protection to the investor, but would add more than its cost to the value 
of the bonds, and would compensate the trustee for the taking of a moral 
risk for which under present conditions it certainly is not paid, but the 
taking of which many think it cannot wholly avoid. 90 



89 Thomas L. Greene, "Corporation Finance," pp. 59, 60. 

90 For detailed discussions of this subject, see 

Proceedings Trust Company Section 1896-1903, pp. 17-25, Paper by Francis S. 
Bangs; pp. 44-46, Paper by William A. Carr; pp. 221-227, Paper by Andrew Squire. 

Proceedings Trust Company Section 1904 pp. 73-88, passim. Discussion of topic 
"Fees for Trust Company Work." 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 369 

The Payment of Coupons. 

As agent for 'the payment of coupons, either in connection with a bond 
trusteeship or independently thereof, the trust company receives in ad- 
vance a remittance equal to the total amount of the coupons due and 
payable at the next interest period. At and after maturity it pays the 
coupons as presented, preferably by check, though they are paid in cash 
when necessary. 

Although coupons are payable to bearer, record is made of the names 
of the persons who present them at the counter, and of the names of the 
banks who present them through the clearing-house. Separate accounts 
are kept of the coupons of each interest period, and a record is kept of 
the numbers of the bonds from which the coupons are cut. The paid 
coupons are cancelled by the punching of holes in them, and are filed 
away by bond numbers. At stated intervals — sometimes once a month — 
these cancelled coupons are returned to the issuing corporation, which 
receipts for them. Statements of the accounts are sent at suitable inter- 
vals. Often the coupons are payable at the office of the trustee of the 
bond issue and also at the office of a fiscal agency in New York, Chicago 
or other large center. Ordinarily the duties and liabilities are clearly 
defined, but the default of the issuing corporation may involve the trus- 
tee in perplexing problems. One of these, which is as yet not fully de- 
cided by the courts, is whether funds remitted for the payment of cou- 
pons are to be considered a trust fund for the coupon holders, or as a 
part of the general assets of the corporation. The question does not, 
of course, affect coupon funds derived from particular sources whose 
revenues have been set aside for the payment of coupons. Other prob- 
lems which may arise are the question of priority between coupons and 
principal when a mortgage is foreclosed, the question as to whether de- 
faulted coupons should bear interest, and the question of missing coupons 
when the corporation wishes to have the mortgage discharged. 

The work of paying interest on registered bonds differs from that of 
paying coupons chiefly in that the interest is remitted to the security 
holders instead of being held subject to their call. The fiscal agent is 
supplied with the necessary funds, and, unless it is itself the registrar of 
the bonds, with a list of the registered bondholders, their holdings and 
addresses. A check for the amount of his interest is mailed to each reg- 
istered bondholder. 

Trust companies act in a number of other capacities as fiscal agent 
for corporations, either receiving or disbursing funds, or both. The 
exact duties involved are of course as varied as the kinds of agency, but 
are usually pretty well defined by the contracts; while the liabilities are 
determined by the ordinary laws of agency. 



Proceedings Trust Company Section 1905, pp. 7-9. Report of Executive Com- 
mittee. 

"Trust Companies" magazine, Vol. I, pp. 279-282, article by William J. Field. 

"Trust Companies" magazine, Vol. II, pp. 634-635, article by John H. Connellan. 

The "Banking Law Journal," Vol. XXI, p. 841, Decision New York Supreme 
Jourt. 



370 TRUST COMPANIES. 

Escrows. 

In its simplest and most common form an escrow is a deed placed by 
the grantor in the hands of a third party, to be delivered to the grantee 
upon the fulfillment by the latter of certain specified conditions. Instru- 
ments other than deeds may be placed in escrow; as, for example, a mort- 
gage or a note, but it must be an obligatory instrument or an instrument 
under seal. In addition to escrows in the strict legal sense, however, 
trust companies are often made depositaries of various things of value 
which are to be held for delivery under conditions such that they may be 
considered informal kinds of escrows. 

To be strictly an escrow the delivery of the instrument by the grantor 
to the third party must be absolute, beyond power of recall, and its deliv- 
ery to the grantee conditioned only upon the performance by him of his 
part of the contract. Having performed the conditions, the grantee may 
if necessary compel the delivery of the instrument ; and the death of either 
party will not void the contract or prevent delivery. In fact, it is held 
that an escrow, upon performance of the conditions, becomes an absolute 
conveyance or grant even if the instrument itself is not delivered by the 
holder. Hence if A leaves with a trust company a deed with instruc- 
tions that it is to be held and later to be turned over to B upon A's order, 
the instrument is not an escrow, for its delivery is not dependent upon 
conditions to be fulfilled by B, and the company is not acting as the 
holder of an escrow, but merely as the agent of A. 

The duty of the holder of an escrow is to deliver the instrument to 
the grantee upon his performance of his part of the contract, or to 
withhold the instrument if the contract be not fulfilled; the one obligation 
being as important as the other. The holder's liability is measured by 
the degree of his faithfulness to such duty. If he wrongfully deliver 
the instrument when the conditions are unfulfilled, he may be liable to 
the grantor; while upon fulfillment of the conditions, the grantee may 
compel delivery. It is evident, therefore, that a trust company in under- 
taking the holding of an escrow should be sure that the contract is clear 
and definite and is thoroughly understood by both parties. While an oral 
contract may in some cases be legal, the only safe rule is to have the con- 
tract in writing and signed by both parties. Particular care should be 
taken by the trust company to avoid accepting an escrow whose condi- 
tions are so vague that question may arise as to whether they have been 
fulfilled, putting the holder in the position of an arbiter of a question 
whose decision might be a matter of doubt. The holder might then find 
himself in a very unenviable position, liable to prosecution by either 
party; or, if not legally liable, at least incurring the ill-will of one or 
both of the parties. 

Depositary Under Plans of Reorganization. 

A common function of trust companies, especially in the larger cities, 
is that of acting as depositary of securities when a corporation is to be 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 37i 

reorganized or when two or more corporations are to be consolidated — the 
procedure being practically the same in the two cases. Here the depos- 
itary is practically the holder of escrows. In the case of a reorganiza- 
tion, the reorganization committee details in writing the plan proposed, 
and the security holder, by the act of depositing his securities, enters 
into the contract. Upon receipt of the securities the depositary issues 
temporary receipts, which are later replaced by engraved and negotiable 
certificates of deposit, after the depositary has had time to examine the 
securities to make sure that they are genuine and are "good deliveries." 
The exact wording of the certificates varies according to the conditions, 
but there is an exact description of the documents deposited, a reference 
to the agreement under which the deposit is made, a statement that the 
depositor assents to the agreement and that the depositary holds the 
securities subject to the provisions of such agreement. Each lot of securi- 
ties as deposited is given an accession number corresponding to the num- 
ber of the temporary receipt, and is filed away to await the progress of 
the reorganization. Whenever assessments are to be paid by or distri- 
butions are to be made to the depositors, the certificates are presented and 
endorsements of the transactions are made thereon. After the reorgan- 
ization is complete and the new securities are engraved and ready for 
delivery, the depositors bring in their certificates of deposit and receive 
their proper share of the new securities. 

Executor or Administrator. 

The duties and liabilities of a trust company as the executor or the 
administrator of an estate do not differ in any wise from those of 
an individual acting in like capacity, and are quite definitely fixed 
by law. The employment of the trust company for such services is 
steadily increasing, and will increase more rapidly as the public be- 
comes educated to the very superior qualifications of the trust company 
for this work. 

An executor is a person or corporation appointed by the will of a 
decedent to carry out the provisions of such will; and his duties are 
in general to secure and preserve the assets of the decedent, to protect 
and pay creditors and to distribute the balance of the property as the 
will provides or the law dictates. The office is a sacred one, the executor 
standing as the representative of the deceased and the agent of the liv- 
ing — the creditors and the heirs. There is a personal element in the 
office which even a corporation cannot and ought not to overlook. 

Appointments of trust companies as executors come most often from 
among those who have during their lives been customers in one or more 
of the departments, though others often make such appointments. The 
services of the company's attorney are usually offered without charge 
for the drawing of wills in which the company is named as executor, and 
the company takes charge of such wills also without charge. Upon the 
death of the testator, the first step is the probating of the will. The 



372 TRUST COMPANIES. 

court appointed by law to receive wills and have jurisdiction over the 
estates of the deceased is known in various states as the Probate Court 
the Surrogate's Court and the Orphan's Court. After the probating of 
the will; the executor named therein qualifies before the court according 
to the state laws, and receives from the court letters testamentary, au- 
thorizing him to proceed with his duties. Then follow the gathering 
together of the assets, the filing of an inventory, the advertising for 
claims against the estate. The allowances of the widow or widower and 
the minor children, if any, are set aside; and if the estate is solvent, and 
funds are in hand, the preferred claims, such as expenses incurred dur- 
ing the decedent's last illness, funeral expenses, taxes, etc., are paid. The 
claims of other creditors are examined, and those which are allowed may 
be paid at once or deferred as circumstances dictate; but the executor is 
of course not protected in paying them unless the estate is evidently sol- 
vent. If the estate appears insolvent, the fact is reported to the court, 
and notice of the probable insolvency is published. A part at least of 
the personal property is usually to be converted into cash as soon as expe- 
dient. Real property may not ordinarily be sold unless the will express- 
ly so provides or such sale is necessary to pay debts; and in the latter 
case an order of court is obtained. The executor renders statements to 
the court as circumstances or the law may require. When his work is 
practically complete with the exception of the final distribution of the 
property, a statement is rendered and an order from the court is obtained 
for the distribution of the balance in the hands of the executor. The 
latter then makes the distribution, files a final account and is discharged. 

The procedure is practically the same in all the states, the differences 
being chiefly in matters of detail. Sometimes the trust company is one 
of two or more co-executors, the family lawyer often acting with the 
company. In such case the trust company usually keeps the accounts 
and is custodian of the securities, the duties of the other co-executors be- 
ing chiefly advisory. The trust officer in charge of this work should be 
well versed in the law of administration, and often special legal advice 
is needed. Careful judgment is called for in many cases, and the skill 
of experienced trust companies has often saved large amounts for estates 
that were threatened with insolvency. Often where debts are pressing 
the company may make temporary advances of money, thus preserving 
the property. The passing upon claims is a task requiring judgment 
and a knowledge of the law. Care should be taken not to pay claims 
barred by the statute of limitations. All records and reports should be 
full and accurate and one point of the trust company's superiority for 
such work lies in its ability to attend to these matters with skill and care. 
Getting possession of the assets is sometimes a matter requiring tact 
and industry. 

The duties of the administrator are very similar to those of the ex- 
ecutor. The executor is appointed by the testator and his duties are 
usually detailed in the will. The administrator's appointment comes from 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 373 

the court, and his duties are detailed in the laws of the state, except in 
the case of an administrator with the will annexed. As in the case of 
the executor, he is charged with the duty of gathering the assets, paying 
the debts and distributing the property. His distribution may be deter- 
mined by the laws of descent instead of by the provisions of a will. The 
administrator is rarely charged with the sale of real property, and may 
not make such sale except on order of the court. An administrator is 
appointed when the deceased has made no will, or has made a will and 
appointed no executor, or when an executor has failed to qualify, re- 
fused to act, or died. 

Trustee. 

The trust company which is named as executor of a will is also often 
made trustee under the "wall; and in such case after its discharge as 
executor it continues the management of specified property in the ca- 
pacity of trustee. Trusteeships under wills are also frequently re- 
ceived independently of executorships. The most common purposes 
leading to the creation of such trusteeships are the keeping all or part 
of the estate intact for the benefit of heirs and the endowment of some 
charitable or educational enterprise. The law limits the duration of 
trusts for the benefit of persons to the life of two persons in being and 
twenty-one years thereafter; but trusts for charitable purposes may be 
in perpetuity. 

The duty of the trustee involves the entire management of the prop- 
erty entrusted to his care. The title is vested in him, and his first step 
is to obtain possession. He is held to diligence, intelligence and good 
faith in the exercise of his powers, and is responsible for failure to do 
things necessary to the good of the estate as well as for the doing of 
illegal or unauthorized acts. He must invest idle funds within a reason- 
able time and exercise care to make the income of the estate as large as 
is consistent with the entire safety of the principal. He is under obli- 
gation to examine the investments held by the estate when he assumes 
control, to see that they are safe and reasonably productive; and to dis- 
pose of any that appear unsafe or that are declining in value, as soon 
as may be expedient, but not so hastily as to cause loss thereby. He 
must, in short, do and refrain from doing things which a prudent man 
would do or refrain from doing with his own estate; save that he may 
not take the risks which even a prudent man might take with his own 
property, and he must follow to the letter any specific and lawful instruc- 
tions contained in the will. In matters not covered by directions in the 
will, he is bound to know and to .follow the provisions of the specific or 
general laws relating to his duties and limitations. The routine duties 
of the office ordinarily include the preservation and if possible the in- 
crease of the estate, the investment of funds, the collection and dis- 
bursement of income, and at the termination of the trust the final dis- 
tribution of the estate according to the terms of the will. 



371 TRUST COMPANIES. 

Trusteeships under special agreement, taking effect during the grant- 
or's life, may be undertaken for the same purposes for which testa- 
mentary trusts may be created — for any lawful purpose — and may be of 
the same duration. In case the trust becomes in force at once, the 
grantor may reserve the right to general oversight of the management 
of the property and the power to alter or revoke the trust instrument 
during his or her life, or the trust may be irrevocable. Trusts of this 
kind are created to establish a fund for charitable purposes, to provide 
for support of incompetent individuals or of individuals who do not wish 
to manage their own business affairs. Sometimes the trust is created by 
the grantor for his own benefit, to avoid care and responsibility. The 
variety of trusts of this character is increasing as the adaptability of the 
trust company to their handling becomes better understood. A plan 
that is growing in favor is that of appointing a trust company as trustee 
of the proceeds of life insurance policies. By this means the insured 
is enabled to direct the disposition of such funds after his death as he 
wishes, and at the same time place the funds in the hands of a company 
amply able to manage them in a business-like manner. The company col- 
lects and invests the proceeds of the policy or policies, and pays to the 
beneficiaries the income; or if the amount is not sufficient to provide the 
income needed for support of the beneficiaries, arrangement may be made 
for the payment of an annuity for a certain number of years, using the 
income and gradually reducing the principal. In order to keep the re- 
maining part of the fund always invested, the trust may be given partici- 
pation in a mortgage or group of mortgages. In the creation of such a 
trust, the trust company is named in the policy as beneficiary in trust 
for whomsoever the grantor may wish, and at the same time there is 
executed a deed of trust vesting title in the trustee and directing the use 
of the funds. 

Another form of trust made possible by the development of the trust 
company is the accumulation of a fund for the purchase or building or 
maintenance of a home for the wife or children or other beneficiaries of 
the donor. 

In a similar way, churches and educational or charitable institutions 
may choose a trust company as trustee for the accumulation and invest- 
ment of an endowment or building fund, thereby being relieved of the 
care of the moneys and being assured of speedy and safe investment 
thereof. The trust company is able to invest the funds in small and odd 
amounts, interest included, by means of participations in mortgages or 
other securities. 

The instrument creating a trusteeship by agreement specifies in detail 
the duties of the trustee, which may be much the same as those of a 
testamentary trustee. 

Guardian, Conservator, Etc. 

As guardian of the estates of minors, or conservator, committee or 
curator of the estates of the incompetent, the duties are similar to those 



DUTIES AND LIABILITIES OF TRUST COMPANIES. 375 

of testamentary trustee, though in many states the provisions of law, 
especially as to investments, are more stringent. In general, the guardian 
or conservator is obligated to preserve the property, to keep it on a safe 
income-producing basis, to use the income discreetly for the benefit of the 
ward, and at the termination of the trust to turn over the balance on 
hand. The guardianship of a minor is terminated when the ward be- 
comes of age; that of a person of unsound mind terminates at death, or 
may be terminated if the ward regains his reason. The duties require 
an intimate knowledge of the needs of the ward as to living expenses, 
education, etc. Guardianship by trust companies is in most states limited 
to the estate, but in a few states may be either of the person or of the 
estate or of both. When of the person, the duties involve close personal 
supervision of the ward, as in the case of an individual acting as guar- 
dian. The guardian or conservator is under the jurisdiction of the court, 
and as in the case of the testamentary trustee makes frequent state- 
ments to the court. 

The Investment of Trust Funds. 

The investment of the funds held in trust in various fiduciary capaci- 
ties is a matter requiring intelligent judgment. In most states the laws 
on the subject are quite fully developed both as to the investments au- 
thorized and those forbidden, and the first duty of the trust company 
undertaking such work is to thoroughly inform itself as to the laws of 
the state or states which govern in the case of each of its trusts. The 
executor and the administrator are not, as a rule, called upon to invest 
funds, their duties being rather to convert personal property into cash. 
Yet there are instances in which the court may authorize them to invest 
idle funds. On the other hand, trustees, guardians and conservators 
often find the investment of funds one of their principal duties. 

The general principles governing such investments are well estab- 
lished. The fiduciary is plainly under the duty of making the estate 
produce an income, of keeping the funds invested and not allowing them 
to remain for an unreasonable length of time merely on deposit, even 
if drawing interest. Yet the security of the principal must be the first 
consideration, and the amount of income second. In most states the 
fiduciary may not take risks in the matter of investments that even a 
prudent man might take with his own money. Unless specific authority 
is given in the instrument creating the trust, the funds may not be in- 
vested in personal securities, in manufacturing concerns, in trade or 
business, or in speculation. Investments may not be made in unimproved 
real estate so as to tie up the funds for long periods. Any specific in- 
structions as to investments in the will or other instrument creating the 
trust must be followed. The fiduciary may not derive profit from the 
investment of the trust funds. 

In many states the classes of investments permitted are specified by 
the laws; and in such states the laws must of course be strictly fol- 



376 TRUST COMPANIES. 

lowed. In some states only general principles are laid down, while in 
several the matter is left to the discretion of the trustee. But in any 
case the investments are subject to the approval of the court; and the 
trustee may be compelled to make good the loss and pay interest if in- 
vestments have been made which the court cannot approve. In determin- 
ing what securities the court will approve, where the classes of invest- 
ments are not specified in the laws, the fiduciary may often be guided by 
the classes of investments permitted for savings banks. It sometimes 
happens that classes of investments are specified for guardians, but not 
for trustees; in which case the latter may be guided by the rules laid 
down for the former. It is usually possible, and in the case of guardians 
often obligatory, to obtain an order of court authorizing certain invest- 
ments. The most common forms of investments authorized are United 
States, state and city bonds and first mortgages on productive real estate, 
and where there is doubt these may be relied upon. The field is gradu- 
ally widening, however, and some states specifically authorize other forms 
of investments, including loans on collateral, land, bank stocks and rail- 
road bonds and stocks. 

A fundamental principle is that investments of trust funds must not 
be mingled with the assets of the company, and the investments belong- 
ing to each trust must be kept separate, so that the owner may be readily 
identified. The fiduciary is, of course, responsible for the safe-keeping 
of the securities. It is common to allow access to trust securities only 
to two officers of the company jointly, and removal of such securities 
from the vault only upon written requisition duly signed. 

The troublesome problem of the investment of odd amounts and of 
amounts too small to permit of the purchase of a bond or a mortgage is 
being solved satisfactorily by giving the estate a participation in a mort- 
gage or in a group of securities. By this means any amount that an 
estate may have in hand may be made to produce an income without 
great delay. 

When securities are purchased at a premium over their face value, the 
interesting question arises whether the present beneficiary is entitled to 
the full income, or whether a portion of the income must be reserved as 
a sinking fund, so that at maturity of the security the principal will be 
intact. The question is of great importance where there is a life tenant 
to whom the income is to be paid, the principal at the death of the life 
tenant to go to another party. The question is sometimes settled in ad- 
vance by the provisions of the instrument under which the fiduciary acts; 
but when it is not so settled, the safer plan is to withhold enough of the 
income to keep the principal intact. 



CHAPTER XVI. 

TRUST COMPANIES OUTSIDE OF THE UNITED STATES. 

THE trust company has attained its greatest development, by far, in 
the United States, and in the form in which it exists here may with 
propriety be looked upon as peculiarly an American institution. 
The germ of the trust company idea, however, has not been altogether 
lacking in other parts of the world; and Australia has developed corpora- 
tions which adhere strictly to the original and distinctive function of the 
trust company — fiduciary business. 

As far back as the beginning of the nineteenth century, the idea of 
providing corporate agencies for the transaction of business as trustee 
and agent was put into practice in India by the "Agency Houses. " 
"These were concerns organized to transact business for trustees or indi- 
viduals, to receive moneys on deposit, and to administer estates;" and a 
knowledge of their operations inspired the undertaking of this class of 
business, as early as 188.6, by one of the earliest of American trust com- 
panies. 01 

During their second occupation of Cape Colony, South Africa, at the 
beginning of the nineteenth century, it appears that the Dutch estab- 
lished public corporations for the management of the estates of deceased 
persons; an idea which the English adopted, after their reoccupation of 
the Cape, by the establishment of their first "Trustee and Executor Com- 
pany" in 1832. This company had a capital of <£29j400, divided into 
168 shares of «£l?5 each. "It combined a purely trust business with a 
form of banking, and apparently had power to allow interest on trust 
funds, and to trade with them. 92 There are now four trust companies 
in Johannesburg, South Africa, two of which also do a life insurance 
business, like the early trust companies of the United States. 93 

The Australian Trustee Company. 

Trust companies, as corporations for the transaction of trustee busi- 
ness, pure and simple, are well established in Australia, and their business 
is steadily growing. They appear to have been uninfluenced by the trust 
companies of the United States, partaking of none of the characteristics 
of the "financial department store," but adhering to one general line 
of business. 

The records of the first of these companies — The Trustees, Executors 
and Agency Co., Ltd., of Melbourne — show that its organization was 



91 Sketch of The Pennsylvania Company for Insurance on Lives and Granting 
Annuities, Philadelphia, pp. 32-35. 

92 The Age, Melbourne, Australia, January 21, 1907. See also "Dalgety's Review," 
Melbourne, August. 190fi 

93 Ernest Heaton: The Trust Company Idea and Its Development, p. 34. 

25 377 



378 TRUST COMPANIES. 

inspired by a knowledge of the success of the trustee and executor com- 
panies of South Africa. It was established in 1878, making progress 
rather slowly for the first few years, during which it had practically no 
competition. About 1885 the public began to awaken to the value of 
such institutions, and between that date and 1893 thirteen more companies 
were organized in various parts of the Commonwealth, all of which are 
still in existence, making a total of fourteen companies now doing busi- 
ness in Australia. Of these, seven are located in Victoria, two each in 
New South Wales and Tasmania, and one each in Queensland, South 
Australia and West Australia. The table presented herewith, taken from 
the Year Book of Australia for 1907, gives a list of these companies, 
with the latest available statistics. The amounts of the estates which are 
held under administration is published by only seven of the companies, 
the total for the seven being £21,429,246. The Year Book estimates the 
total for the other companies at from £8,000,000 to £10,000,000, mak- 
ing a probable total of estates held for administration by all the trustee 
companies of Australia of about £30,000,000. As will be seen from the 
table, the dividends ranged from 4% per cent, to 11 per cent. — averaging 
over 8 per cent. — while in some cases the excess of the net earnings over 
the amounts of the dividends permitted substantial additions to the 
"reserve funds" and undivided profits. 

The statistics given in the table reflect the different character of the 
Australian trustee company as compared with the American trust com- 
pany in one important particular — there are no deposits. The Australian 
trustee company does not receive deposits, and does neither a commer- 
cial nor a savings banking business. Nor does it exercise any of the other 
auxiliary powers common to trust companies in the United States, except 
that in a few cases safe deposit vaults are maintained, which are found 
unprofitable because the banks do such business free of charge. As will 
be seen below, the functions of these companies are practically limited to 
those exercised by the probate division of the trust department of the 
American trust company. 

The fourteen companies are chartered and their powers and limita- 
tions are defined in every case by private act; but in Victoria there is 
also some general legislation designed to regulate the business. The acts 
are all essentially the same, and their general character may be seen 
from an outline of the act conferring powers upon the original company 
— The Trustees, Executors and Agency Company, Limited, of Melbourne, 
which is also the largest Australian trustee company, and probably the 
largest company in the world carrying on exclusively the administration 
of estates. It has a paid-up capital of £90,000, reserve fund and undi- 
vided profits of £26,826, and the amount at credit of estates, trusts and 
clients on December 31, 1906, was £8,754,551. 

The act conferring powers upon this company starts with a preamble 
setting forth that, "Whereas, from the uncertainty of human life and from 
other causes great difficulty often arises in securing the services of suit- 



TRUST COMPANIES OUTSIDE OF THE U. S. 



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380 TRUST COMPANIES. 

able persons for the office of trustee, executor and other similar offices; 
and whereas, in order to secure the more certain discharge of the duties 
of such offices a company has been formed and incorporated/' etc. 

The powers granted in this and succeeding acts or by the general 
statutes of Victoria are (as stated in the company's circular) to act as 
executor under wills alone or jointly, as administrator in intestate es- 
tates, as administrator with the will annexed, as trustee under marriage 
and other settlements, as trustee in cases of settlement of property for 
the benefit of women and children, as temporary executor, administrator 
or trustee, as receiver and committee of estates under the Lunacy Statute, 
as agent for absentees or others, as guarantor or surety for the proper 
administrator of estates; to take over existing trusts from individual trus- 
tees, to collect income, invest funds, manage or realize estates and per- 
form general agenc} 7- business, and to invest its own funds on clearly 
defined lines. To the powers specifically granted the company is strictly 
held by the Trustee Companies Act of 1890, which says (section 385) 
that a trustee company "Shall not engage in, carry on or be concerned in 
any business trade venture or undertaking of any kind whatsoever other 
than such as is expressly Authorized by the special act or acts relating 
to such trustee company, and other than general agency business, and 
other than the deposit of its own funds with a company or person carry- 
ing on the business of a bank of deposit, and other than the investment of 
such funds in the stock debentures or marketable securities of any Gov- 
ernment corporation or company or on mortgage of real property or 
Crown leasehold. Provided, that any such company may guarantee the 
safety of the principal and the regular payment of the interest of trust 
funds committed to its management as executor, administrator or trustee, 
and provided that any such company may give or enter into any bond 
or guarantee for the purpose of enabling any person or persons to obtain 
administration of the estate of any deceased person or persons in any 
case where such estate shall be placed under the management or control 
of such company by the administrator." The section closes with these 
words: "Any director, member (stockholder) or officer of a trustee com- 
pany who is shown to be concerned in or a party to any wilful breach of 
the provisions of this section shall be guilty of a misdemeanor." 

The special act provides that £10,000 of the capital of the company 
shall be invested in debentures or inscribed stock of the colony, to stand 
in the name of the Treasurer of the colony in trust for said company, but 
transferable only upon the joint consent of the Treasurer of the Colony 
and the said company, or upon the order of the Supreme Court or of a 
judge of said Court. This fund, together with the balance of the cap- 
ital, "both paid and unpaid," and the other assets of the company, stand 
in lieu of special bonds in cases of administration. The amount of this 
deposit for the other companies varies from .£5,000 to £20,000, accord- 
ing to the size of the company. The stockholders are subject to double 
liability. 



TRUST COMPANIES OUTSIDE OF THE U. S. 381 

The act provides for careful supervision and holds the company and 
its officials to strict accountability. It is "subject in all respects to the 
same control and liable to removal as private individuals" acting in sim- 
ilar capacities. Any person legally interested in an estate under the 
company's administration may through the Supreme Court compel an 
accounting. The Treasurer of Victoria may likewise compel the render- 
ing of an account. The Supreme Court may at any time require an 
audit of any estate in the hands of the company, by an auditor appointed 
by said court. The following provision, similar to that already quoted 
from the general statutes, is significant: In every case where the company 
acts as administrator, trustee, receiver or committee, "The managing di- 
rector, manager and directors shall be individually and collectively in 
their own proper persons responsible to the court, and shall in their own 
proper persons be liable by process of attachment commitment for con- 
tempt or by other process to all courts having jurisdiction in that behalf 
for the proper discharge of their duties and for obedience to the 
rules, orders and decrees of such courts in the same manner and to the 
same extent as if such managing director, manager and directors had 
personally obtained probate or letters of administration," etc. This does 
not, however, release the assets of the company from liability for pe- 
cuniary loss occasioned by imperfect or improper discharge or neglect 
of duty. 

Moneys remaining unclaimed for a period of five years by the person 
entitled to same are to be paid by the company to the Receiver of Rev- 
enue in Melbourne, and by him be placed in "The testamentary and trust 
fund," which is invested in Government debentures or stock. The com- 
pany is required to deliver to the Treasurer at the end of every six months 
a statement of all such unclaimed moneys; and for default in compliance 
with the provisions of this section is liable to a penalty not exceeding five 
pounds for every da}^ while such default continues, "and every director 
and manager of the company who knowingly and wilfully authorizes or 
permits such default shall incur the like penalty." A similar penalty is 
imposed for failure to render the regular reports to the Government, 
which must be rendered according to a prescribed form on the first Mon- 
day in February and the first Monday in August every year. 

Considering the limitations placed upon the companies, the supervision 
maintained over them, and the penalties to which the companies them- 
selves and their officers individually are subject in case of violation of law, 
one is not surprised at the statement of a recent writer that "Not one of 
the fourteen trust companies has lost a single penny of its capital or of 
the money of its beneficiaries, or has ever been removed from trusteeship, 
or held liable for any neglect, wrong-doing, or breach of trust by any 
court in the Commonwealth during the whole time they have been in 
existence." 

Reference to the table given above discloses the fact that in no case 
is the subscribed capital paid up, while in most cases the uncalled capital 



382 TRUST COMPANIES. 

far exceeds the paid up capital. The total subscribed capital is £3,253,- 
555, the paid up capital £404,422, leaving the uncalled capital £2,849r 
133. This is regarded as a very strong feature of the companies, the 
uncalled capital being looked upon as a great protection to the creditors, 
"It is almost unnecessary to point out that this (the uncalled capital) 
represents a very considerable security for the proper administration of 
estates, especially as the companies are generally very conservative with 
their share lists, refusing to accept as shareholders any who cannot sat- 
isfy them as to their financial soundness. There is generally a limit to 
the number of shares which may be held by each shareholder, this being 
2,000 in the case of the Perpetual, and there is with most of the compa- 
nies a provision that a large portion of the capital can only be called 
up in the event of liquidation, such portion being, therefore, practically 
earmarked as security to the trusts. 94 

The scales of charges for services varies somewhat with the different 
companies. Those of The Trustees, Executors and Agency Co., Ltd., 
which fairly represent the average, are as follows: For acting as exec- 
utor, administrator, trustee under will, receiver and committee of estate 
under Lunacy Statute, 2% per cent, on the capital value (gross) of the 
estate up to .£50,000; 1V2 per cent, on the amount from .£50,000 to £100,- 
000; 1 per cent, on the amount over £100,000; 2% per cent, on all 
income received; on transferred trusts, marriage and other settle- 
ments, not exceeding 5 per centum on income received, but charge sub- 
ject to arrangement. Charge on corpus (capital), as above, on distri- 
bution. 

The New Zealand Public Trust Office. 

There are two trustee companies in New Zealand — The Perpetual 
Trustees' Estate & Agency Co., of New Zealand, Ltd., and The Trustees. 
Executors' and Agency Co., of New Zealand, Ltd., both located at Dune- 
din. They are small companies, having resources of about £28,000 
each. The administration of estates in the island is mainly in the hands 
of The Public Trust Office, which, though not a trust company, is con- 
sidered here because of its unique character and its evident interest 
to students of the trust company movement. 

The Public Trust Office, which is a department of the Government 
service, was constituted by "The Public Trust Office Act" of 1872, and 
its functions have been enlarged by succeeding acts. The office is admin- 
istered by an officer of the Government, known as the Public Trustee. 
There is an advisory body, known as "The Public Trust Office Board," 
consisting of the Colonial Treasurer and two other members of the Min- 
istry, with four other officials, of whom three form a quorum. The con- 
sent of this board is necessary before the Public Trustee can accept any 
appointment. The Public Trustee is forbidden to accept any appointment 
jointly with any other person. 

94 C. E. Cowdery, of The Perpetual Trustee Co., Ltd., Sydney, in "Trust Com- 
panies" magazine, Vol. II, p. 676. 



TRUST COMPANIES OUTSIDE OF THE U. S. 383 

Any person may appoint the Public Trustee a trustee, executor, ad- 
ministrator, guardian, committee, agent or attorney — subject, of course, 
to the consent of the Public Trustee — and the duties and rights of the 
latter are the same as if a private person had been appointed. Trustees 
may, with the consent of the court, appoint the Public Trustee sole trus- 
tee in their places, while executors and administrators are expressly au- 
thorized to appoint the Public Trustee sole executor or administrator. 
No vesting order is required, as all the property by virtue of the appoint- 
ment, and without any conveyance or assignment thereof, becomes vested 
in the Public Trustee. Any testator may deposit his will in the Public 
Trust Office. 

Upon the death intestate of any person domiciled or having property 
in New Zealand, the Public Trustee is entitled to administration as of 
right, and is not bound to give notice to any person who but for this 
provision would be entitled to the grant, though power is reserved for 
the court to make a grant to such person if it sees fit. Where an intestate 
estate is under ,£250 the Public Trustee can administer without even 
getting a grant, and where an}^ person dies testate, and application for 
a grant is not made within three months, the Public Trustee can apply 
for and obtain a grant of letters of administration, unless the executor 
can satisfy the court that the delay has been unavoidable or accidental. 
In the matter of procedure, special privileges are allowed to the Public 
Trustee. 

The provisions for the disposition of the funds are of peculiar inter- 
est. A testator or settler may direct special investments for his moneys, 
in which case the directions are followed, at the risk, of course, of the 
estate. All other capital moneys, however arising, and whether directed 
to be invested or not (unless expressly forbidden to be invested) become 
one common fund, and are invested in certain securities denned in the act. 
From the income on this common fund interest is paid to the several 
estates at a rate to be determined from time to time by the Governor in 
Council, and is credited quarterly. The rate to be allowed is limited to 
5 per cent, on amounts not exceeding £3,000, and on larger amounts 
must not exceed 5 per cent, on the first =£3,000 and 4 per cent, on the 
excess over £3,000. The common fund is practically guaranteed by the 
state; if the fund is insufficient to meet the lawful claims thereon, the 
Colonial Treasurer shall pay such sums out of the consolidated fund as 
may be necessary to meet such deficiency. 

"The charges for realization of any estate, whether of lunacy, intes- 
tacy, wills, or agency, are: Any sum up to £1,000, 5 per cent.; on the 
next £3,000, 3 per cent. ; on the next £6,000, 2 per cent. ; on all over 
£10,000, lVo per cent.; provided that with respect to cash or balances 
at the bank, or money received under any policy of insurance, there shall 
be charged a percentage of only half the above." These are maximum 
charges, and may be and often are reduced under special circumstances. 
With regard to income, as soon as all the property has been realized and 



384 TRUST COMPANIES. 

the money has been transferred to the common fund of the office, the 
income is as a matter of practice paid to the beneficiaries free of all 
office commission, though there is a provision for a charge not exceeding 5 
per cent, upon such income. The office pays expenses and makes a 
small profit. 

The office appears to be of the greatest benefit to the community in 
the handling of small intestate estates. By the Lunacy Act of 1882, the 
Public Trustee is authorized to undertake the administration of the 
estates of lunatics in every case where no committee may be appointed 
for the estate, and 90 per cent, of estates of lunatics in the asylums are 
administered by him. 

According to the New Zealand Year Book, the total value of the 
estates in the hands of the Public Trustee in 1903 was as follows: Wills 
and trusts, £l,279.,743; intestate estates, £197,368; real estates, £7,585; 
lunatic estates, £170,585; native reserves, .£375,000; West Coast settle- 
ment reserves, £655,000; unclaimed lands, £21,504; making a total of 
£2,706,785. (The population of New Zealand is about 800,000.) 

Canadian Trust Companies. 

The Canadian trust companies, as to their powers and limitations, 
occupy a position between those of the Australian trustee company and 
the American trust company. While they differ somewhat among them- 
selves, none of them exercise the wide powers of the latter, and none are 
so closely restricted as the trustee companies of Australia. Some of the 
charters under which the different companies act permit of rather wide 
powers ; but .in practice many of the powers have not been exercised, and 
the business of the companies is mainly confined to the duties of trustee, 
administrator, the management of estates and the investment of funds. 

They do not undertake a commercial banking business, nor do they 
as a rule take ordinary savings deposits, although three or four of them 
have in very recent years established savings departments, and one at 
least is advertising "banking by mail." Until within very recent years 
they have not undertaken to do corporate trust work, such as receiving 
and alloting subscriptions for stock, acting as transfer agents, etc. ; but 
a few companies are now doing that class of work. A few of the com- 
panies are closely associated with loan companies, and trust and loan 
companies appear under the same headings in the Government reports — 
as is the case in several states of the Union. 

The number of companies now (1909) in existence is thirteen, their 
aggregate resources, including trust funds and estates, being in the 
neighborhood of eighty million dollars. Of these thirteen companies, 
the main offices of five are located in Toronto, of one in Halifax, of two 
in London, Ontario, of two in Montreal, of one in Vancouver and of 
two in Winnipeg. Seven of the companies maintain branches in other 
cities, the total number of such branches being eighteen. Some of the 
companies maintain safe deposit departments. 



TRUST COMPANIES OUTSIDE OF THE U. S. 385 

Ontario and New Brunswick have general laws affecting trust com- 
panies, but the laws are of incomplete character. The Ontario Trust 
Company Act (1897, Cap. 206) provides that the High Court may- 
appoint a suitable person to investigate the affairs and management of 
a trust company, and the Lieutenant-Governor may appoint an inspector 
to examine the affairs of such company and report on the security af- 
forded to those for whom its engagements are held. 

Applications for trust company charters may be referred by the 
Lieutenant-Governor to the High Court of Justice for an opinion as to 
the necessity for incorporation of the company, having regard to the 
business to be done and companies already incorporated and doing busi- 
ness, and whether the public convenience and advantage would be pro- 
moted. If the opinion is unfavorable, the application shall not be pro- 
ceeded with. 

The New Brunswick statute (1902, Cap. 106) authorizes the appoint- 
ment as trustee of a trust company which is approved by the Lieutenant- 
Governor. The company is subject to inspection at any time, and is re- 
quired to deposit with the Receiver-General such sum of money or amount 
of securities as he may deem sufficient as security for the proper per- 
formance of its trusts within the province. The statutes of both provinces 
prohibit trust companies from issuing debentures, and authorize them to 
receive as deposits the sinking funds of municipalities and corporations. 

Seven of the Canadian trust companies have been established since 
the year 1900; five were established during the nineties. The first trust 
company in the Dominion, — The Toronto General Trusts Corporation, — 
which is also considerably the largest trust company there, began busi- 
ness in 1882, under a special charter granted by the Government of 
Ontario. On December 31, 1907, it reported total liabilities of $32,909,- 
902.68, of which the principal items were Capital and "Reserve" (Sur- 
plus), $1,400,000; Trust, Guarantee and Agency Funds, $16,654,332; 
Trust Estates and Agencies, $14,785,702. The company confines itself 
chiefly to trustee business, though its charter grants wider powers. It 
does not receive deposits, nor underwrite securities. It transacts con- 
siderable business for the Government of the Provinces, invests court 
funds, and has control and management of lunatic estates in Ontario. 

Following is a list of the trust companies in Canada (1909) : — 

The Toronto General Trusts Corporation, Toronto. (Branches at 
Ottawa and Winnipeg.) 

The Imperial Trust Company of Canada, Toronto. 

The National Trust Company, Toronto. (Branches at Montreal, 
Winnipeg, Edmonton [Alberta], and Saskatoon [Sask].) 

The Trusts and Guarantee Company, Toronto. (Branch at Calgary, 
Alberta.) 

The Union. Trust Company, -Toronto. (Branches at Winnipeg, Ham- 
ilton [Ont.], Regina [Sask.], and London, England.) 

The Canada Trust Company, London. 



386 TRUST COMPANIES. 

The Eastern Trust Company, Halifax. (Branch at St. John, N. B.) 

The London and Western Trust Company, London. 

The Montreal Trust and Deposit Company, Montreal. (Branch at 
Halifax.) 

The Royal Trust Company, Montreal. 

The British- American Trust Company, Vancouver. (Branches at 
Grand Forks, B. C, Victoria, B. C, Winnipeg; Agency at Spokane, 
Wash.) 

The Western Trust Company, Winnipeg. 

The Standard Trusts Company, Winnipeg. 

Other Countries. 

Outside of the United States, Australia and Canada there are no coun- 
tries in which the trust company has made enough progress to be con- 
sidered an established institution. Within the past ten years, however, 
beginnings have been made which indicate the probability that the trust 
company movement, in somewhat varying forms, will soon have a firm 
foothold in a number of foreign countries. 

Prior to its admission as a territory of the United States, the trust 
company had been established in Hawaii, and there are now four such 
corporations in the Islands, all located at Honolulu — The Hawaiian Trust 
Company, organized in 1 898 ; The First American Savings and Trust 
Company; The Henry Waterhouse Trust Company and The Bishop 
Trust Company. The trust functions exercised by these companies include 
all the ordinary trust powers, and the right "To transact as agents any 
other business or undertaking, trust, mercantile or otherwise, which may 
be necessary, useful or convenient to the main purpose of the corpora- 
tion." They handle as general agents all kinds of insurance. They 
have not banking powers, the statute specifically prohibiting the transac- 
tion of both a general banking and a savings banking business. 

There are trust companies operating in Porto Rico, devoted specially 
to developing the resources of the island. An American company has 
been formed, with headquarters at Pittsburg, to operate in the Philippines. 

In Cuba a beginning was made by the establishment in January, 1906, 
of The Trust Company of Cuba, located at Havana. It has a paid-up 
capital of $500,000, and in June, 1907, had surplus and undivided 
profits of $31,691, and deposits of $323,872. It is closely patterned after 
the trust companies of the United States, maintaining banking, savings, 
trust and real estate departments. The laws do not permit the company 
to act as executor, but an executor may appoint it to act for him. There 
is a considerable field for the company in the management of property 
owned by parties who reside in Spain, a large amount of property in 
Havana being so held. 

In Mexico there have been started several enterprises under the name 
of trust companies which were organized for speculative purposes by 
Americans, usually as branches of concerns in the United States, which 



TRUST COMPANIES OUTSIDE OF THE U. S. 387 

have gone out of existence. Effort has been made to obtain general legis- 
lation providing for the organization of trust companies, but thus far 
without success. The only existing trust company incorporated under the 
laws of the Republic of Mexico is The Mexican Trust Company (Com- 
pania Fideicomisaria Mexicana) of Mexico City, which has a capital of 
$250,000 ($125,000 United States money), and which includes in its 
directorate a number of prominent Mexicans. The powers conferred 
by its charter are exceedingly wide, including the right to do a banking 
business, to perform all the ordinary trust functions, "To promote the 
incorporation of all kinds of companies in the form it may deem fit, and 
to deal in their stocks ; to buy and sell securities of all kinds ; to buy and 
sell mines and to work them on its own account; * * * to hold, acquire, 
transfer or lease concessions granted by the National Government for the 
exploitation of all kinds of natural products as well as for those which 
have an industrial object; * * * and in general all such business as the 
companj^'s board of directors may determine." Plans are on foot for 
the establishment of other companies, presumably along the same lines. 

In October, 1905, a company known as the Banco Fomento Indus- 
trial Americano was organized at Buenos Ayres, Argentine Republic, with 
an authorized capital of $5,000,000 — of which at last advices, however, 
only a small part was paid up. The company numbers among its di- 
rectors several of the prominent men of Buenos Ayres, which is a pro- 
gressive city of over 1,100,000 people. It has as its avowed object "The 
development and enlargement of the established industries in the country 
or out of it and the introduction of new ones that it is thought advisable 
and opportune to establish and all the operations that the North Ameri- 
can trust companies carry on." The powers granted are very wide, in- 
cluding some of a speculative nature, in addition to the more conserva- 
tive powers of the trust company as we know it. 

Japan entered into the field in 1902 by the establishment under Gov- 
ernment auspices, after an official investigation of the trust companies of 
the United States, of The Industrial Bank of Japan, Ltd. (Nippon Kogyo 
Ginko). It had an authorized capital of 10,000,000 yen, which was in- 
creased to 17,500,000 yen in 1906, and of this at last advices 13,750,000 
yen were paid up. The. company is fostered by the Japanese Govern- 
ment, which guaranteed dividends of 5 per cent, for the first five years. 
Some of the shares have been placed in England and in the United States, 
and the stock sells at a good premium. In its first year the company 
successfully floated in London an issue of 50,000,000 yen of national 
bonds, a task entrusted to it by the Government. The powers of the com- 
pany have been considerably enlarged since its organization, and it now 
advertises its lines of business as follows: 

1. Loans on the security of national or local loan bonds, or deben- 
tures and shares of companies. 

2. Subscriptions for or taking over by transference, national or local 
loan bonds, or the debentures of companies. 



388 TRUST COMPANIES. 

3. General deposit and safe deposit business. 

4. Business of a trust company. 

5. Discounts of bills on security of national or local loan bonds, or 
debentures and shares of companies. # 

6. Loans on mortgage of railway, factory and mine. 

7. Banking and attendant business in foreign countries. 

The by-laws of the company define its trust business as follows: 
"Article 39- The trust business to be undertaken by this bank shall be in 
general as follows: 

1. To be intrusted with the administration, settlement, etc., concerning 
money, securities, movable and immovable properties and other prop- 
erties. 

2. To deal in matters relating to public loans, and the loans and 
shares of companies; such as issuing bonds or debentures, paying prin- 
cipal, interest, profit, etc. 

3. To deal in matters relating to mortgaging debentures or to giving 
guarantees on behalf of debtors." 

England and Scotland. 

Notwithstanding the fact that since the year 1886 repeated efforts 
have been made to establish the idea of the corporate trustee in Great 
Britain, the progress of the movement has been exceedingly slow. Two 
very formidable obstacles are yet to be overcome — the excessive conserva- 
tism of the people, which results in a decided lack of interest in the 
movement, and numerous legal restrictions which confine corporate un- 
dertakings of this kind within very narrow limits. Yet the shortcomings 
of the individual acting in fiduciary capacities are quite generally appre- 
ciated, and a number of plans designed to remedy the conditions have 
been proposed in Parliament. One of these was the Judicial Trustees 
Act of 1896, which after over ten years has failed to interest the public 
and does not solve the problem. On January 1, 1908, however, The Pub- 
lic Trustee Office, authorized by The Public Trustee Act of 1907, began 
business in London, and is meeting with success. 

On the whole, the trust company movement in Great Britain is mak- 
ing progress, at least eight corporations being at present engaged 
in trying to build up this kind of business. Of these the earliest wa3 
The Public Trustee, Limited, of Edinburg, which was established in 1886. 
This company is strictly limited to the undertaking of trusts. In 1887 was 
established the Trustees, Executors and Securities Insurance Corporation, 
Ltd., and in 1888 the Law Guarantee and Trust Society, Ltd., both located 
. in London. The latter has some eight or ten branches scattered over Eng- 
land and Scotland, maintains a trust department, writes fidelity insurance 
and guarantees the payment of debentures and mortgages. 

The insurance companies have begun to give their attention to the 
possibilities of the trust business, the Ocean Accident and Guarantee Cor- 
poration of London having taken on trust powers in the early nineties, 



TRUST COMPANIES OUTSIDE OF THE U. S. 389 

while more recently the Royal Exchange Assurance Company of Liver- 
pool, the Commercial Union Assurance Company of London, and some 
others, have entered the field. There is evidence, too, that the banks 
may undertake the transaction of formal trust business, The Union of 
London and Smith's having already done so. 

European Countries. 

The trust company idea cannot be said to have gained a foothold as 
yet in any company in continental Europe. The nearest approach to it 
is in Germany, where there are some companies of very recent origin 
which undertake certain trust company functions with regard to the 
handling of corporations. These have been organized by several of the 
large banking interests as auxiliary institutions. The first, and for some 
time the only one of these, The Deutsche Treuhand Gesellschaft of Ber- 
lin, was organized in 1890 by the Deutsche Bank and the banking-house 
of Jacob Stern at Frankfort-on-Main. Its business consists chiefly of 
corporate trust work — the formation and reorganization of joint-stock 
companies, dealing in their shares, acting as agent for the redemption 
of dividend warrants, transfer agents, etc. 

The mortgage banks of Germany and Austria, the Credit Foncier, 
Credit Lyonnais and other companies in France, and similar institutions 
in some other European countries, perform functions analogous to the 
lending and savings banking operations of the American trust company, 96 
but these are not peculiarly trust functions, and the institutions named do 
not partake of the distinctive features of the trust company. 



96 See Proceedings Trust Company Section, A. B. A. 1896-1903, pp. 243-253, ar- 
ticle by Charles F. Phillips on "The Business in Foreign Countries Analogous to 
That of Trust Companies in the United States." 



CHAPTER XVII. 

SUMMARY OF STATE LAWS RELATING 
TO TRUST COMPANIES. 

The aim in the preparation of this summary has been to include the essen- 
tial facts, greatly condensed, of the laws of the several States specifically 
relating to trust companies. Effort has been made to have it correct 
as far as it goes, and to include the latest legislation on the subject. 
The scope of the work is, however, limited to a summary of statutes specifi- 
cally relating to trust companies, and no effort has been made to include 
reference to all corporation or banking laws that might be construed as applying 
to trust companies. 

The writer wishes to acknowledge his indebtedness to officials of the vari- 
ous States for copies of State laws on the subject and for information furnished; 
and also to E. A. Feasel, Librarian of the Cleveland Law Library, for cour- 
tesies extended in the use of the library, without which the preparation of this 
summary would have been impossible. 

Alabama. 

THREE or more persons may incorporate for the purpose of carrying 
on any lawful business, under the Business Corporation Act, sec- 
tion 16 of which defines the powers of banks and trust companies 
doing a banking business. The powers specified are to do a regular bank- 
ing business, including discounting; to make loans of all kinds; to issue 
bills to circulate as money, upon the terms prescribed in the Constitution 
of the State; to become trustees for any purpose; to be appointed and to 
act as executors, administrators, guardians and receivers; and to "do any 
business and exercise any powers incident to the business of trust com- 
panies doing a banking business." Married women and children may 
control their own deposits. Stockholders are not subject to double lia- 
bility. Stockholders have the right of access to the books and records at 
reasonable and proper times. Trust companies may consolidate with 
other banks or trust companies. 

Reports according to a form prescribed by him must be made to the 
Superintendent of Banks not less than twice each year, such reports to 
be as of any past day specified by him. They must be published in a 
local paper. The Superintendent of Banks must examine each com- 
pany at least twice a year, without previous notice, and oftener if he 
deems it necessary. The capital required is $25,000 in towns of less 
than 5,000 inhabitants; $75,000 in cities of from 5,000 to 30,000; $100,- 
000 in larger cities. The reserve required is 15 per centum, of which 
two-fifths must be in cash in vaults. Loans may not be made to officers 
or employees "without good security." Loans to one party may not ex- 
ceed 10 per centum of the capital, surplus and undivided profits, unless 
amply secured by good collateral and approved by a majority of the 
board of directors. Loans upon, and purchase of the company's own 
stock are forbidden. The establishment of branches is forbidden. 

390 



STATE AND TERRITORIAL LAWS. 391 

Prior to the passage of the above-named Act, in 1903, trust compa- 
nies were chartered by special acts of the Legislature, and such charters 
usually grant ample powers. 

The Act of March 2, 1911, created a State Banking Department in 
charge of a Superintendent of Banks, who has jurisdiction over Trust 
Companies. 

(General Laws 1903, Nos. 395 and 522; Laws 1907, No. 243; Laws 
1911, No. 84.) 

Arizona. 

Trust companies are incorporated under the general incorporation 
law, under which any number of persons may associate for incorporation 
"for the transaction of any lawful business." The trust company law is 
found in the Acts of 1903, No. 31, and trust companies and banks are 
further governed by Chapter XXXVL, Title IV., Civil Code of 1913. 
Powers specified, to act as executor, administrator, guardian, trustee, or 
guardian of the estate of a lunatic, idiot, minor, "or to act in any other 
fiduciary capacity as if it were a natural person." The articles 
of incorporation must authorize such powers. The courts are 
given power to make such appointments. Such courts or officers making 
appointments may require the company to give such security as they 
deem proper, and to make orders regarding the trusts committed to 
them and to require all accounts that they might require of a natural 
person acting in the same capacity. Trust companies are forbidden to 
make loans on their capital stock, or to purchase same except to pre- 
vent losses on debts previously contracted. They are forbidden to pur- 
chase or loan upon mining stocks. 

The State xAuditor, who is ex-officio Bank Comptroller, must call for 
at least three reports each year, as of a past day, giving information 
specified in the law. The reports must be published in a local paper. 
The Comptroller must examine each company once a year, or oftener, 
and report its condition to the Attorney-General. Use of the name 
trust company is forbidden without the Comptroller's license. The re- 
serve required is fifteen per centum of aggregate deposits, of which 
two-fifths must be in cash. 

(Code 1901, paragraphs 130, 131, 764. Acts 1903, No. 31. Acts 
1907, No. 96. Civil Code 1913, Title IV., Chapter XXXVL; Acts 
1909, Nos. 90 and 96; Acts 1912, No. 57.) 

Arkansas. 

Under the act creating a State Bank Department, effective on Jan- 
uary I, 1914, five or more persons may incorporate a bank, trust com- 
pany or savings bank. The articles of incorporation must state "the 
nature of the proposed banking business, whether commercial trust or 
savings company, and how many kinds of such business it proposes to 



39% TRUST COMPANIES. 

engage in." The capital, divided into shares of not less than twenty- 
five dollars nor more than one hundred dollars each, is the same for all 
classes of banks, as follows: $10,000 in places of less than 2,500 inhab- 
itants; $20,000 in cities of from 2,500 to 5,000 inhabitants; $25,000 in 
cities of from 5,000 to 10,000 inhabitants; and $50,000 in larger cities; 
but no company may do a trust business when its paid-up capital is 
less than $50,000. Powers specified for trust companies, to receive 
moneys in trust, and to accumulate same; to allow interest at not ex- 
ceeding the highest rate allowed by law; to accept and execute all such 
trusts and perform such duties of every description as may be committed 
to them by State or United States courts ; to hold real or personal estate 
or trusts created in accordance with the laws of the State, and execute 
legal trusts in regard to same; to execute or guarantee any bonds re- 
quired to be given in proceedings in law or equity in the courts of the 
State, but no such bond shall exceed one-half the paid-up capital of the 
company; to act as agent for the investment of money for other persons, 
and as registrar or transfer agent; to execute trusts for married women 
in respect to their separate property, real or personal, and as agent in 
the management of same, "and generally to have and exercise such 
powers as are usually had and exercised by trust compnies;" to act as 
administrator, receiver of any estate, guardian or curator of any infant 
or insane person or his estate; to conduct fidelity insurance and title 
insurance business; to loan money on real estate and collateral security; 
to issue its debentures or notes and to pledge its mortgages upon real 
estate and collateral securities as security therefor; to buy and 
sell Government, State, municipal and other bonds, negotiable 
and non-negotiable papers, stocks and other investment secu- 
rities. The number of directors must be three or more, each 
of whom must own $500 par of stock. The reserve required 
is fifteen per cent, of aggregate deposits, "a part of which 
shall be in cash in the vaults," and the remainder may be on de- 
posit with approved reserve agents. If, however, the company wishes 
to act as a reserve agent for Arkansas banks, its reserve must be twenty 
per cent., of which two-fifths must be in cash. Before declaring a divi- 
dend, one-tenth of net profits must be carried to surplus until it equals 
twenty per cent, of the paid-in capital. 

No trust company may purchase its own stock, unless to prevent 
loss on debts previously contracted; nor may it loan to stockholders on 
their stock as collateral. Loans to one person or interest may not ex- 
ceed thirty per cent, of the paid capital and surplus, bona fide discounts 
and collateral loans on warehouse receipts meeting certain conditions 
being excepted. Officials permitting overdrafts are personally responsi- 
ble unless relieved by the ratification of the directors. Stockholders are 
subject to double liability. 

All banks, including trust companies, are subject to the supervision 
of the Bank Commissioner, to whom they must render at least two re- 



STATE AND TERRITORIAL LAWS. 393 

ports each year, and more if called for by him. He shall examine each 
company at least once a year. As to supervision, and as to any mat- 
ters not otherwise specified in the law, trust companies are subject to 
the same laws as govern banks. (Laws of 1903, Act 135. Laws of 
1907, Act 208. Laws of 1913, Act 118.) 

California. 

Under the Bank Act of 1909, as since amended, three or more per- 
sons ma} 7 incorporate as a savings bank, a commercial bank or a trust 
company, or to perform the functions of any two or all such corpora- 
tions. Many of the provisions of the law apply to all banks, under 
which term all of the above corporations are included. Branch offices 
are permitted under certain conditions, with the approval of the Super- 
intendent of Banks. Each director must own $500 par of stock, and 
the directors must meet at least once a month. The words bank, sav- 
ings bank, trust company, etc., may not be used except by corporations 
authorized under this act. Deposits unclaimed for more than twenty 
years must be deposited with the State Treasurer. Married women and 
minors may control their deposits. Joint deposits may be paid to sur- 
vivors: Lists of stockholders and the number of shares held must be 
kept accessible to stockholders, depositors and creditors ; and a list of 
directors and their stock holdings must be posted in the office, accessible 
to the public. The paid-up capital and surplus of a commercial bank 
must equal ten per cent, of its deposit liabilities ; that of a savings bank 
must equal ten per cent, of deposits up to two million dollars; seven and 
a half per cent, of the excess up to five million dollars ; five per cent, 
of the further excess up to fifteen million dollars ; two and a half per 
cent, of the further excess up to forty million dollars ; and one per 
per cent, of the excess over forty million dollars. One-tenth of net 
profits of the preceding half year must be carried to surplus until the 
surplus equals twenty-five per cent, of the capital. Any bank may con- 
duct a safe deposit department, but may not invest therein more than 
one-tenth of its capital and surplus. No bank may buy its own stock or 
loan upon same, unless to prevent loss on debts previously contracted. 
No bank receiving deposits may purchase, underwrite or guarantee, and 
no bank may invest in or loan upon, any bond issue, except certain 
municipal bonds, in excess of five per cent, of its assets. No bank may 
purchase the capital stock of any corporation, unless to prevent loss on 
a debt previously contracted. No bank may loan upon the stock of an- 
other bank in excess of twenty-five per cent, of the loaning bank's cap- 
ital; nor make a loan upon the stock of another bank unless it has been 
in existence two years and earned and paid a dividend. No bank may 
advertise as a savings bank unless it maintains a savings department 
subject to the provisions of this act. Checks may not be certified un- 
less sufficient funds are on deposit, and certified checks must be charged 
immediately; violation of these provisions constitutes a felony. The par 

26 



394 TRUST COMPANIES. 

value of the stock of a bank must be at least one hundred dollars. 
Banks are authorized to join the National Reserve Association. 

The Act requires the thorough segregation of the departments of a 
bank which carries on more than one line of business. If it acts as a 
commercial bank, a savings bank and a trust company, it must segregate 
its capital and surplus for each department, must segregate a reserve for 
each equal to the amount required for each separate business ; and the 
accounts, deposits, investments and transactions, including the deposits 
with other banks, must be kept separate for each department. Trust 
funds must be kept separate, and may not be counted as reserve; but 
they may be deposited with the commercial or savings department. 

For banks doing a commercial, savings and trust business, the cap- 
ital required is as follows: In towns of not over 5,000 inhabitants, $125,- 
000; in cities of from 5,000 to 25,000 inhabitants, $150,000; in cities 
of from 25,000 to 100,000 inhabitants, $200,000; in cities of from 
100,000 to 200,000 inhabitants, $400,000; and in cities of over 
200,000 inhabitants, $500,000. Every bank must maintain for each de- 
partment a reserve equal to that required for the respective business 
conducted. Commercial banks must carry a reserve of fifteen per cent, 
of aggregate deposits, unless they act as depositary for other banks, in 
which case the reserve required is twenty per cent. ; in either case, two- 
fifths of the reserve must be in cash, and three-fifths may be on deposit 
in banks in the State other than savings banks, or one-half of the three- 
fifths may be on deposit with banks other than savings banks in New 
York, Chicago or St. Louis. Savings banks, or savings departments, 
must keep a reserve of four per cent, of aggregate deposits, of which 
one-half must be in cash and one-half may be on deposit with the 
classes of reserve banks above specified for commercial banks, or may be 
invested in United States bonds ; but the amounts to be kept on hand in 
cash need not exceed $400,000. Not more than five per cent, of the de- 
posits of a savings bank may be deposited with one bank, nor more than 
fifteen per cent, with all other banks, without consent of the Superin- 
tendent. No savings bank or department may receive deposits of other 
banks other than savings deposits, nor shall such deposit be counted as 
part of the reserve of the depositing bank nor exceed $10,000. 

Banks acting as trust companies only must have a capital of $100,- 
000 in towns or cities of less than 100,000 inhabitants, and of $200,000 
in cities of over 100,000 inhabitants. The portion of capital assigned 
to the trust business must be segregated, and $50,000 of the paid capi- 
tal must be set aside as security for the faithful performance of court 
trusts, and $50,000 for private trusts by companies located in cities of 
less than 100,000 inhabitants, and $100,000 for each purpose by compa- 
nies located in larger cities. Provision is made for the increase of these 
amounts when trust funds in court trusts reach certain amounts. Be- 
fore accepting trusts or receiving deposits of trust funds trust compa- 
nies must deposit with the State Treasurer amounts corresponding to the 



STATE AND TERRITORIAL LAWS. 395 

amounts of capital set aside. Such deposits may be in cash, government 
or municipal bonds, or first mortgages on California real estate worth 
double the amounts of the mortgages. Mortgages on the company's own 
building and lot, at market value, may be included. 

The trust powers specified are to act as executor, administrator, guar- 
dian (of estate only), assignee, receiver, depositary or trustee under ap- 
pointment of court, trustee for any purpose permitted by law; and it 
"may accept and execute any trust provided for in this act, or permit- 
ted by any law of this State, to be taken, accepted or executed by an 
individual." Trust companies are not required to give bonds, other than 
the deposits above mentioned. They must pay interest on trust funds. 
The inspection and supervision of the Superintendent of Banks extends 
to the court trusts only, and does not include private trusts. 

As to its investments and loans, a trust company is subject to the 
same regulations as savings banks, except for special instructions that 
may govern trust funds. These regulations are as follows : No loans 
shall be made except on adequate security of real or personal property, 
and shall not be made on unsecured notes, nor for a period of over ten 
years; loans on Government, State or California municipal bonds must 
have a margin of ten per cent. ; on other municipal bonds, bonds legal 
for savings banks in New York or Massachusetts, railroad, public utility 
and collateral trust bonds (which to be acceptable must meet certain 
qualifications given at length in the law), a margin of fifteen per cent.; 
on personal property, on stock or on bonds not mentioned above, a mar- 
gin of fifty per cent. Loans on real estate must be first liens, and must 
not exceed sixty per cent, of market value of the property, except under 
certain conditions specified. Loans to officers or directors are prohibited. 
Loans to one person or interest must not exceed fifty per cent, of the cap- 
ital and surplus of the bank, with certain exceptions. Loans on mining 
stocks are prohibited. 

The investments authorized include real estate needed for the busi- 
ness in an amount not exceeding the paid-up capital and surplus ; real 
estate acquired in satisfaction of debts ; United States and California 
State bonds ; under certain limitations described at length in the law, 
other State and municipal bonds, railroad, public utility and collateral 
trust bonds, first mortgage bonds or notes, and bonds legal for invest- 
ment by savings banks in New York or Massachusetts. 

All banks, including trust companies, are under the supervision of 
the Superintendent of Banks. He must examine them once a year and 
may do so oftener if he sees fit. He must call for at least three reports 
each year, as of past days specified by him, which shall so far as possi- 
ble coincide with dates of national bank calls. The contents of the re- 
ports are specified in the law, and a separate report must be rendered 
for each department. Reports must be published in local newspapers. 
The directors must make or have made an examination of the bank once 
a year. If they fail to do so, the Superintendent has authority to make 
or have made a special examination. 



396 TRUST COMPANIES. 

(Statutes of 1909, chapter 76; Statutes of 1911, chapters 11, 188, 
494 and 495; Statutes of 1911, Special Session, chapters 2 and 24; Stat- 
utes of 1913, chapters 104 and 192.) 

Colorado. 

Five or more persons may associate for incorporation as a trust com- 
pany. They shall execute articles of incorporation as provided in section 
2, chapter 19, General Statutes. One copy of these articles shall be filed 
with the Secretary of State, and one with the recorder of deeds in the 
county where the company is to do business. The capital, paid in full, 
in cash, must be at least $50,000 in cities of less than 50,000 inhabitants; 
$100,000 in cities of from 50,000 to 150,000 inhabitants, and $250,000 
in larger cities. The number of directors must be three or 
more. Powers specified, to act as fiscal agent, registrar and 
transfer agent; to receive from persons, corporations or under order of 
court, deposits of money, securities or other personal property in trust 
or for investment or for safe keeping, subject to withdrawal on demand 
or on time certificates ; to hold and accumulate same or pay interest there- 
on at not to exceed six per centum; to loan on real or personal security; to 
act as trustee under any mortgage or deed of trust or bond, "and to ac- 
cept and execute any other trust" not inconsistent with the laws ; to act 
under order of court as guardian, receiver or trustee of the estate of any 
minor, the annual income of which is not less than $100, and to act as 
depositary of funds paid into court; to accept and execute any legal 
trusts regarding the handling of estates, real or personal, of living or 
deceased persons, confided to it by courts of record, persons, corporations 
or other authority, being accountable to all persons in interest for the 
faithful discharge of such trusts ; to take and execute any trusts confided 
to it by courts of record and hold real or personal property in connection 
with such trusts; to purchase, invest in and sell stocks, bills of exchange, 
notes, bonds and mortgages and other securities, and to give receipts, 
certificates, bonds or obligations for same or for moneys borrowed; 
to act as executor, administrator, trustee under will, conservator or 
committee of the estate of lunatics, idiots, persons of unsound mind 
and habitual drunkards — courts being authorized to make such appoint- 
ments ; to conduct a safe-deposit business, a fidelity insurance business ; 
"provided, that nothing herein shall authorize trust companies to engage 
in the business of banking except, in the event of being expressly author- 
ized, except to the extent herein allowed and provided for." 
"That all corporations incorporated under this act may do or perform all 
acts and exercise all powers connected with, belonging to or necessary 
for the full and complete exercise and discharge of the rights, powers 
and responsibilities hereinbefore granted, and all provisions of this act 
shall be liberally construed so as to accomplish the purposes and objects 
hereby proposed." A trust company may hold such real estate as is 
necessarv to carry on its business. 



STATE AND TERRITORIAL LAWS. 397 

Courts appointing the compan)?- to trusts may make such orders and 
require such accounts as they might if the company were a natural per- 
son. The trustees or board of directors have discretionary power of in- 
vesting trust funds in the stocks or bonds of the United States, any State, 
any incorporated city or county of the State duly authorized, "or in such 
real or personal securities as they may deem proper, but no trust com- 
pany shall invest in the stocks or bonds of any. private incorporated com- 
pany." No loan shall be made, directly or indirectly, to any trustee, 
director or other officer of the company, and no loan on the stock of the 
company. Stockholders are subject to double liability. In handling court 
trusts the company is subject to the same responsibilities, has the same 
powers, and shall receive the same compensation as individuals holding 
similar trusts, except as herein otherwise provided. Trust funds and in- 
vestments must be kept separate from the assets of the company and be 
so designated as to show to what trust they belong. Trust companies, 
whether they do a banking business or not, are under the supervision of 
the State Bank Commissioner, to whom they must make not less than 
five reports a year, according to a form prescribed by him. The re- 
ports must be called for a past day, the days selected to be the same 
as those named by the Comptroller of the Currency for reports of 
National Banks, and must be published in a local newspaper. Special 
reports may be called. The Commissioner must examine each company 
twice a year or oftener. The use of the words "trust" or "trust com- 
pany" in titles is forbidden except to regularly incorporated trust com- 
panies. 

Trust companies which do a banking business are subject to the bank- 
ing laws as to such business. 

(Mills' Annotated Statutes of Colorado, Revised Edition 1912, chap- 
ter 13, sections 317-403. Sections 382-391 relate to Trust, Deposit and 
Security Associations, and sections 392-103 to Trust Companies. Laws 
of 1907, chapters 111, 138,140. Laws of 1913, chapters 41 and 160.) 

Connecticut. 

Trust companies in this State were formerly incorporated by special 
act of the Legislature, but in 1913 a general act was passed under 
which nine or more persons may organize a State bank or trust com- 
pany. The capital required is $25,000 in towns or cities of less than 
15,000 inhabitants; $50,000 in cities of from 15,000 to 50,000 inhabi- 
tants, and $100,000 in larger cities. The powers authorized include 
general banking business, safe deposit business, acting as depositary for 
public, court and trust funds, as executor, administrator, trustee, guar- 
dian or conservator (of estate only, not of person), agent, registrar, 
fiscal agent, trustee for corporations. Such a corporation may loan on 
personal security or on real estate located in the State. It may pur- 
chase real estate, provided not more than twenty-five per cent, of its 
capital, surplus and profits may be invested in same, and it may lend 



398 TRUST COMPANIES. 

not more than twenty-five per cent, of its commercial deposits on real 
estate security, this limitation not applying to funds in the savings de- 
partment. There are a number of general laws regulating the business 
of such corporations, most of them applying also to State banks and sav- 
ings banks. Trust funds, unless it is otherwise provided in the instru- 
ment creating the trust, and deposits in the savings department, 
may be invested in such securities ^is savings banks are al- 
lowed to invest in. These are specified in great detail, and include United 
States bonds, certain State and municipal bonds, loans on certain col- 
lateral, notes of two or more persons resident in the State, stock of 
banks and trust companies in the State or in New York city or Boston, 
certain railroad bonds, mortgages on real estate worth at least double 
the amount loaned and situated in the State or in certain specified places, 
and bonds of certain public service corporations. Trust companies main- 
taining savings departments are required to invest the deposits of such 
department separately according to the rules for investment for savings 
banks; such investments being exclusively for the protection of savings 
depositors until their claims are paid in full. Such deposits are also 
treated separately for purposes of taxation. Notwithstanding anything 
in their charters to the contrary, trust companies are expressly forbidden 
to issue, sell or negotiate their own bonds or mortgage securities, etc., as 
investments, to guarantee same, or to engage in any form of insurance 
business ; except that a company actually engaged in the business of a 
title insurance and guarantee company on January 1, 1907, may con- 
tinue such business. 

Trust companies may receive deposits of public moneys under certain 
restrictions, but not to an amount from one official of more than thirty 
per cent, of the paid-up capital, surplus and profits of the company. 
They must maintain a reserve fund of fifteen per centum of aggregate 
deposits, of which not less than four-fifteenths must be in legal tender 
on hand. One-fifth of the reserve may consist of certain approved rail- 
road bonds and the rest may be on demand deposit with specified reserve 
agents. Loans may not be made on the stock of the company. Loans 
to one person, firm or corporation may not exceed ten per centum of paid- 
in capital, surplus and profits, except that on collateral, with a margin of 
twenty per centum, such loans may not exceed twenty per centum of such 
capital, surplus and profits. Paper made or endorsed by officers or 
clerks of the company may not be discounted, nor may any loans, with 
or without Collateral be made to them, nor overdrafts by them be per- 
mitted. Loans to parties out of the State may not be made until the 
loans to residents amount to at least half the capital. Unsecured loans 
to directors may not exceed five per centum of capital, surplus and 
profits, and all loans, including collateral loans, may not exceed ten per 
centum to any one, or thirty per centum to all together; aud all such 
collateral loans must have a margin of twenty per centum. Such loans 
on collateral to one director must not exceed ten per centum of capital, 



STATE AND TERRITORIAL LAWS. 399 

surplus and profits. The use of the word "trust" in signs or titles is 
forbidden except to regularly chartered trust companies. The statutes 
provide in detail for the issuance of a new savings pass-book when the 
old one is lost. 

Trust companies are under the supervision of the Bank Commission- 
ers, to whom they must render at least five reports each year, setting 
forth in detail such information as said commissioners may require. The 
commissioners must examine each company annually or oftener, and are 
required to examine each department. If the Treasurer of the trust 
company is also Cashier of a National bank, examinations must be made 
at the same time as the National bank examiner examines the National 
bank. 

For purposes of taxation, trust companies must file statements with 
the tax commissioner annually during the first fifteen days of October, 
showing number of shares of stock, their market value, names and resi- 
dences of stockholders and number of shares owned by each. The 
malicious making or circulating of derogatory statements regarding 
trust companies and other banks constitutes an offense punishable by 
fine or imprisonment. Directors are forbidden to declare dividends 
(upon which a yea and nay vote must be taken), except from earnings 
remaining after deduction of losses, expenses and certain long overdue 
notes and debts. Semi-annually or oftener the directors must have taken 
a trial balance of savings deposit ledgers and report any difference to 
the bank commissioners. Once in five years they must employ a certified 
public accountant for this work. 

(Revised Statutes, 1902, sections 254, 1969, 3400, 3401, 3402, 3403, 
3404, 3411, 3416, 3428, 3429, 3457, 3458, etc. Public Acts, 1903, chap- 
ters 167 and 204. Public Acts, 1905, chapters 54, 204, 207, 231. Public 
Acts, 1907, chapters 85, 130, 180. Public Acts, 1909, chapter 40. Pub- 
lic Acts, 1911, chapters 76 and 197. Public Acts, 1913, chapters 50, 
127, 137, 187, 194.) 

Delaware. 

Trust companies in this State are incorporated by special act of the 
Legislature. There are a few general laws regarding such corporations, 
most of them applying also to other financial corporations. They are 
under the supervision of the Insurance Commissioner, to whom they 
must render not less than two reports each year, according to the form 
prescribed by him, within twenty days of receipt of request from him for 
such report. Such report must be published once in a local newspaper. 
The Commissioner has authority to examine trust companies at his dis- 
cretion or on request of the company. If unsafe conditions are revealed, 
the commissioner may take temporary charge, and report to the Attorney- 
General, who shall institute proceedings. If a trust company is author- 
ized to act as surety or guarantor, it must file with the Insurance Com- 
missioner a copy of its charter, make to him an annual statement and 



400 TRUST COMPANIES. 

pay an annual license fee of $100, and other lesser fees. Courts are 
authorized to appoint trust companies to offices of trust ; and may in their 
discretion not require such corporations to give surety on bonds given for 
faithful performance of duty; but the capital, surplus and property of 
the company shall be liable. All liabilities and obligations arising out of 
any such trusts are "made liens upon its real estate prior and paramount 
to any other lien or incumbrance the said corporation may create or suffer 
respecting the same." 

No corporation possessing banking powers may establish branches 
unless authorized by the Insurance Commissioner. If authority is 
granted the capital stock must equal at least $25,000 for each office 
conducted. Minors may control their deposits in banks and trust com- 
panies. * 

The reserve required for trust companies is the same as that for 
banks. It is ten per cent, of aggregate deposits exclusive of trust or 
(time certificate deposits not due in less than thirty days, in towns or 
cities of less than fifty thousand inhabitants, and fifteen per cent, of 
same in larger places. In caeh case, one-third of the reserve must be 
in cash, and the balance may be on deposit with certain classes of banks 
and trust companies designated in the law and to be approved by the 
Insurance Commissioner. 

The use of the word "Trust" in titles is forbidden except to cor- 
porations under the supervision of the Insurance Commissioner. 

(Statutes, Vol. XXII, chapter 330, sections 1, 2, 4, 5, 7, 8, 9. Laws 
of 1903, chapter 330. Laws of 1909, chapters 162, 163. Laws of 
1911, chapter 190. Laws of 1913, chapter 196.) 

District of Columbia. 

Twenty-five or more persons may incorporate to do "a safe-deposit, 
trust, loan and mortgage business." They shall file an organization cer- 
tificate with the Commissioners of the District. Notice of intention to or- 
ganize must be printed in two newspapers in the District at least four 
times per week for three weeks. The charter, when granted, must be filed 
with the recorder of deeds for the District, and copies of both the or- 
ganization certificate and the charter must be filed with the Comptroller 
of the Currency, under whose supervision trust companies operate. The 
Comptroller has over trust companies the same visitorial and examination 
powers that he has over National banks, and trust companies must report 
to him as the National banks do. They may not begin business until the 
capital stock is paid in full and the deposit of securities with the 
Comptroller, hereafter described, is made. Powers specified, to make 
contracts ; to sue and be sued, implead and be impleaded in any court as 
fully as natural persons ; to make and use a common seal ; to loan money ; 
"to accept and execute trusts of any and every description which may be 
committed or transferred to them"; to act as a receiver, assignee, ex- 
ecutor, administrator, guardian of the estates of minors with the consent 



STATE AND TERRITORIAL LAWS. 401 

of the guardian of the person of such minor, and committee of the es- 
tates of lunatics and idiots; to accejDt deposits of money for the purposes 
herein designated; to act as fiscal and transfer agent and registrar; to 
issue its debenture bonds upon deeds of trust or mortgages of real estate 
under conditions specified. The courts of the District are authorized to 
appoint trust companies to act in fiduciary capacities. The capital stock, 
all property of the company and the liability of stockholders and officers 
are to be considered as the security required by law for the faithful per- 
formance of duties, and are absolutely liable in case of default. Trust 
companies must also make a deposit with the Comptroller of the Cur- 
rency, in trust, either in money or in bonds, mortgages, deed of trust or 
other securities equal in actual value to one-fourth of the capital stock 
paid in. The Comptroller may from time to time require an additional 
deposit not exceeding in value one-half the paid-in capital stock. The 
company may hold real estate not exceeding vn value $500,000, and in 
addition such as it may acquire in satisfaction of debts. But real estate 
acquired under foreclosure or to secure debts may noi be held longer than 
five years. Charters of such corporations may be made perpetual, or may 
be limited in time, subject to the approval of Congress. The capital 
must be at least one million dollars, half paid in, and all paid within one 
year. Taxes of one and one-half per centum per annum must be paid, in 
lieu of personal taxes. Stockholders are subject to double liability. The 
number of directors must be not less than nine nor more than thirty; all 
of them must be stockholders, and at least half of them citizens and 
residents of the District. The District Supreme Court has jurisdiction 
over trust companies in the requirement of statements, examinations, 
making of orders regarding trusts, etc. Similar corporations already or- 
ganized may acquire the privileges of this act, and all such are subject 
to its provisions. Congress reserves the right to alter, amend or repeal 
the act. Trust companies, in common with all other banking institutions 
in the District, are required to make the same reports to the Comptroller 
of the Currency that National banks are required to make. These re- 
ports must be published in two or more daily papers of Washington, one 
of which must be a morning newspaper. The Comptroller may examine 
such companies at his discretion, or may take possession of them for the 
same reasons and in the same manner as in the case of National banks. 

(Code of the District, sections 715-748. Act approved June 25, 
1906. Included as sections 186-220, and section 224, in National Bank 
Act.) 

Florida. 

Under the trust company act of 1911, five or more persons may or- 
ganize a trust company, to be incorporated under the general laws for 
the incorporation of banking companies. No company not so organ- 
ized shall use the word "trust" as part of its name. Capital required, 
$50,000. Powers granted: To do a regular commercial and savings 



402 TRUST COMPANIES. 

banking business; to act as fiscal agent, transfer agent, registrar, agent 
or trustee for corporations, and to accept and execute any corporate 
trust not inconsistent with the laws of the State; to receive deposits of 
trust moneys or property, to loan money on real or personal security; 
to hold real estate necessary for the business or acquired in satisfaction 
of debts; to execute trusts for married women; to act under appoint- 
ment of court as guardian of the estates of minors and as depositary of 
moneys paid into court; to execute trusts of any legal character con- 
fided to it by persons, corporations or courts of record; to purchase, in- 
vest in and sell stocks, bonds, mortgages on real estate "and such other 
securities as may be of well-known and established value"; to execute 
and sell its debentures or bonds when secured by mortgages upon real 
estate or by deeds of trust assigning mortgages upon real estate in the 
State at not over sixty per cent, of the value of the land, provided that 
the Directors must investigate the value of such real estate and enter 
the valuation of record and the Comptroller must approve the form of 
any such debentures; to act as assignee, receiver or trustee under as- 
signment; to act as executor, administrator, trustee under will, commit- 
tee of the estates of lunatics, etc. ; to do a safe deposit business ; to col- 
lect coupons and manage sinking funds ; and "generally to execute 
trusts of every description not inconsistent with the laws of this State 
or of the United States." 

Trust funds must not be mingled with the assets of the company. 
Loans from such funds, except to municipalities within the State, must 
be upon approved securities with a margin of at least twenty per cent., 
or upon first mortgage on real estate at not over sixty per cent, of the 
value thereof. Each trust company must make with the State Treas- 
urer a deposit of twenty-five per cent, of its paid stock, but not less than 
$25,000. This deposit must be "in cash or equal market value, which 
shall include approved mortgages or deeds of trust of real estate," the 
values to be fixed by the Treasurer, Attorney General and Comptroller. 
Trust companies are not required to give other security for trust funds. 
A list of stockholders and the amount of stock held by each must be 
open to inspection of any stockholder. Stockholders are subject to 
double liability. 

The directors must number not less than five nor more than fifteen. 
Before the declaration of dividends one-tenth of net profits must be car- 
ried to surplus until it equals fifty per cent, of the capital stock. A 
committee of the directors shall be appointed to examine the company 
once every six months or oftener. "if required by the Board." No of- 
ficer or clerk may overdraw his account, nor may loans be made to them 
until authorized by the directors or executive committee. No trust com- 
pany may loan upon its own stock, nor invest therein, except to prevent 
loss upon debts previously contracted. Banks and trust companies are 
forbidden to allow overdrafts; also to issue certificates of deposit ex- 
cept for actual cash. Minors and married women may control their de- 



STATE AND TERRITORIAL LAWS. 403 

posits. The reserve required is the same for trust companies as for 
banks, being twenty per cent, of aggregate deposits, two-fifths of which 
must be in cash, and the balance may be on deposit or invested in bonds 
of the United States or of the State of Florida or counties and cities 
therein. 

Trust companies are under the supervision of the Comptroller of the 
State, to whom they must report according to a form prescribed by him 
at least twice each year. The reports must be published in a local news- 
paper. It is his duty to examine them whenever he deems it expedient, 
or at the request of the company; but he must examine each company 
at least once a year. 

(Laws of Florida, 1911, No. 36, chapter 6155; 1913, No. 5, chapter 
6425; No. 6, chapter 6426; No. 7, chapter 6427. Also sections 2710 
and 2711 General Statutes.) 

Georgia. 

Five or more persons may incorporate a trust company. They must 
file articles of incorporation with the Secretary of State. Before the 
filing of such articles, notice of intention to organize must be published 
once a week for at least four weeks in a local newspaper. Powers speci- 
fied, those of ordinary corporations, and in addition, to act as fiscal and 
transfer agent and registrar; to receive deposits of moneys, securities and 
other personal property and to loan money on real or personal securities? 
to hold real estate such as is needed for the purposes of the corporation 
and such as is acquired in settlement of debts due to it; to act as trustee 
under mortgages and bonds, and to accept and execute any other muni- 
cipal or corporate trust not inconsistent with law; to execute trusts for 
married women in respect to their separate property, real or personal, 
and to act as agent in the management of same; to act under appoint- 
ment of court as guardian, receiver or trustee of the estate of any minor, 
the annual income of which is $100 or more, and as depository of moneys 
paid into court; to receive court trusts of all kinds; to receive in trust 
and manage property of all kinds committed to its care by persons, bodies 
politic or corporations; to purchase, invest in and sell stocks, bills of ex- 
change, bonds and mortgages and to issue the obligations of the company 
for moneys or securities borrowed or received on deposit; to act as ex- 
ecutor, administrator, or committee of the estates of lunatics, idiots, per- 
sons of unsound mind and habitual drunkards. Capital required, at 
least $100,000 paid in, and not to exceed $2,000,000, divided into shares 
of $100 each. The Board of Trustees may consist of not less than five 
nor more than twenty-five persons, each of whom must hold at least 
one share of stock. Trust companies may acquire and exercise 
all the rights and privileges and be subject to the same liabilities and 
restrictions as banks upon compliance with the banking laws. Savings 
banks, trust, security or guarantee companies already organized may ac- 
quire the powers here stated. All trust companies which receive de- 



404 TRUST COMPANIES. 

posits are under the jurisdiction of the State Bank Examiner and are 
subject to the same laws as banks. They must render at least four re- 
ports each year to the Examiner, upon his call. Such reports must give 
full statements of condition according to a prescribed form, as of any 
past day specified by the Examiner, and must be published in a local 
paper within ten days. The Examiner must examine each company twice 
a year or oftener. The companies are required to keep an accurate list 
of the names and addresses of stockholders, and to send such lists to the 
Examiner on the first day of July of each year. Checks may not be cer- 
tified unless the money for same is on deposit, and such checks must be 
charged at once. 

Acts of 1898, p. 78. The Code of the State of Georgia, 1910, sections 
2815-2821 and 2279-2312. Acts of 1907, No. 84. Acts of 1910, No. 
98; Acts of 1912, No. 558.) 

Hawaii. 

Trust companies are organized under the general laws, their powers 
and limitations being defined by special acts relating to such corpora- 
tions. The corporate name must contain the word "trust". It must be 
organized for the specific purpose of doing business as a trust company, 
and such objects must be expressed in its articles of association. The 
capital must be at least $100,000, fully subscribed, and at least $50,000 
must be paid in. No corporation not so organized may act in fiduciary 
capacities or use the words "trust" or "trustee" in its corporate name. 
Powers specified, in addition to ordinary corporate powers : To receive 
and hold and reconvey and dispose of any property, real and personal, 
which may be committed to it upon any trust or trusts whatsoever, from 
any source, including married women and minors, individuals, corpora- 
tions, courts; to act as agents or attorneys in the management of prop- 
erty; to act as transfer agent, registrar, agents for buying and selling 
securities, managers of sinking funds ; to act as executor, administrator, 
trustee, receiver, assignee, guardian, by appointment by will or by 
court; to loan money upon real or collateral security; to issue notes and 
debentures and to pledge mortgages and other securities as collateral 
therefor; to do a safe deposit business; to hold such personal estate as 
is necessary; to lease, hold, purchase and convey real estate as its cor- 
porate property; to purchase, hold and sell stocks and bonds; to act as 
agents of insurance companies and security companies; to do a general 
trust and security business; "to transact as agents any other business or 
undertaking, trust, mercantile or otherwise which may be necessary, use- 
ful or convenient to the main purpose of the corporation". But "Nothing 
herein contained shall be construed as giving the right to issue bills to 
circulate as money or to discount commercial paper, or to do a general 
banking business, or to do a savings bank business." 

Any Circuit Judge may require of any trust company which has been 
appointed to act in any fiduciar}' capacity by Hawaiian courts, a bond 



STATE AND TERRITORIAL LAWS. 405 

in an amount not exceeding $50,000, conditioned for the faithful per- 
formance of duties arising from any such fiduciary appointment; and 
no further bond shall be required, unless the value of a single estate un- 
der its management is more than $50,000. Investment of trust funds are 
at the company's risk, unless they are such as the courts recognize as 
proper when made by an individual acting in like fiduciary capacity or 
are permitted by the instrument creating the trust. 

The Treasurer of the Territory and the Registrar of Public Ac- 
counts are each ex-officio Bank Examiners. They must examine each 
bank and trust company at least twice each year, and oftener if they 
deem it best. After each examination they are required to report the 
statement of the company according to a form prescribed in the statute, 

(Laws of 1905, Acts 68 and 69; Laws of 1907, Act. 76; Laws of 
1913, Act 78.) 

Idaho. 

A "Banking and Trust Company" may be incorporated by three or 
more persons under the general corporation laws. Powers specified: To 
do a regular banking business ; to act as fiscal agent, transfer agent, 
registrar, agent for corporations for any lawful purpose; to receive de- 
posits of trust moneys or other personal property and to loan money 
on real or personal securities ; to hold real property needed in the trans- 
action of business or acquired in satisfaction of debts; the latter must 
be disposed of within five years; to act as trustee under bond issues, and 
to execute "any other municipal or corporate trust not inconsistent with 
the laws of this State" ; to execute trusts for married women in re- 
spect to their separate property; to act under appointment of court as 
guardian, receiver or trustee of the estate of any minor, and as deposi- 
tory of moneys paid into court; to execute any legal trusts or powers in 
regard to the holding of any estate, real or personal, as may be entrust- 
ed to it by courts, persons or corporations; to purchase, invest in and 
sell stocks, bills of exchange, bonds, mortgages and other securities, and 
to issue its bonds or obligations for moneys borrowed or received on de- 
posit or for investment; to act as executor, administrator, guardian or 
trustee. 

Capital stock required, $50,000. The directors must number not 
less than five, each of whom must own $500 par of stock, and one of 
whom must be a resident of the State. No bank or trust company may 
maintain branches. They may not loan upon or purchase their own 
stock, except to prevent loss on debts previously contracted. Stockhold- 
ers are subject to double liability. 

Banks and trust companies must maintain reserves of fifteen per 
cent, of aggregate deposits, of which two-fifths must be in actual cash, 
and the balance may be on deposit with good solvent banks. They may 
not invest more than ten per cent, of paid capital in stocks of other 
banks or trust companies, nor more than five per cent, of paid capital 
in the stock of any one such bank or trust company. Loans to one per- 



406 TRUST COMPANIES. 

son or interest may not exceed twenty per cent, of paid capital and 
surplus, bona fide discounts and loans on warehouse receipts and bills of 
lading excepted. Checks shall not be certified unless money to cover 
same is on deposit. Minors and married women may control their de- 
posits. Liability for payment of forged or raised checks ceases unless 
the depositor gives notice within three months after the voucher is re- 
turned to him. Before dividends are declared, one-tenth of net profits 
must be carried to surplus until it equals twenty per cent, of the paid 
capital. No persons or corporations not authorized under this Act may 
receive money on deposit or transact a banking business. Embezzle- 
ment on the part of bank officers, directors or employees is punishable 
by imprisonment not to exceed twenty years. 

All banks and trust companies are subject to the supervision of the 
Commissioner of the Banking Department. He must examine them 
twice each year, or oftener, without previous notice. They must render 
to him not less than four reports each year, at times that National bank 
reports are called for, according to a form prescribed by him. He may 
call for additional reports. The reports must be published in a local 
newspaper. 

Trust companies maintaining savings departments are subject to the 
laws governing savings banks, as to such deposits. They must maintain 
a reserve in cash of five per cent, of savings deposit. Loans and in- 
vestments of savings and trust deposits must be held solely for the re- 
payment of such depositors. Savings deposits may be invested only in 
United States or Idaho State bonds, bonds of counties, municipalities, 
school or irrigation districts in Idaho with certain limitations, bonds of 
any State or of any municipality, county, school or irrigation district 
therein which has not defaulted on interest, for three years with cer- 
tain limitations, mortgages on unincumbered real estate worth double 
the amount loaned thereon, and in real estate under certain limitations. 
While awaiting investment, such funds may be invested temporarily in 
loans on well secured commercial paper or collateral loans with twenty 
per cent, margin. In lieu of selling the real estate mortgages in which 
its savings deposits have been invested, a savings bank or a trust com- 
pany having a savings department may issue and sell bonds or deben- 
tures secured by such mortgages, but must deposit such mortgages in 
trust with the State Treasurer as trustee, and comply with other re- 
quirements stated in the statute. 

(Code 1901, chapter 92, sections 2332-2337 and 2086 sqq. ; Session 
Laws, 1905, No. 167; Session Laws 1907, S. B. 93; Session Laws 1911, 
Nos. 122, 124; Session Laws 1913, Nos. 187, 191.) 

Illinois. 

Trust companies are incorporated under the general incorporation 
laws, but regulated by the provisions of the trust company law. If they 
wish to do both a banking and a trust business, they are organized as 



STATE AND TERRITORIAL LAWS. 407 

banks, and qualify under the trust company law. Powers authorized, 
assignee or trustee by deed; executor, guardian or trustee by will; trustee, 
assignee, receiver, guardian, conservator, executor or administrator by 
appointment of court; the appointment as guardian or conservator shall 
apply to the estate only, and not to the person; depository for persons 
holding fiduciary appointments. Such corporations are not required to 
give bond or security, but are responsible for investments and are further 
liable the same as natural persons in like positions. They are required to 
pay interest on all trust funds, at a rate fixed by contract or ordered by 
the court. Their compensation may not exceed that allowed to natural 
persons for like services. Before accepting trust appointments or de- 
posits, each company located in a city of 100,000 or more inhabitants 
shall deposit with the Auditor of Public Accounts the sum of $200,000, 
and each company in towns or cities of less than 100,000 inhabitants 
shall deposit $50,000. Said deposits are for the benefit of creditors of 
the company, and shall consist of bonds of the United States or muni- 
cipal bonds of this State or first mortgages on improved and productive 
real estate located in this State and worth at least twice the amount loaned 
thereon. If it appears to the Auditor that the value of the trust property 
held by any company exceeds ten times the amount of its deposit with 
the State, he must require such company to increase its deposit to $500,- 
000 if located in a city of over 100,000 inhabitants or to $125,000 if in 
a smaller city or town. The deposit may be reduced to the original 
amount when the Auditor is satisfied that the value of the trust property 
held has been reduced below ten times the amount of such original de- 
posit. Neither the deposits nor the loans of such a company shall at any 
time exceed ten times the amount of its paid-up capital and surplus. 

The capital required for banks is $25,000 in towns and cities of less 
than 5,000 inhabitants, $50,000 in cities of from 5,000 to 10,000 inhabi- 
tants, $100,000 in cities of from 10,000 to 50,000 inhabitants, and 
$200,000 in larger cities. 

Trust companies are required to file with the Auditor, during the 
month of January of each year, a statement of condition as of Decem- 
ber 31 preceding. The information called for is detailed in the statute, 
and is very full. It includes a list and brief description of trusts held. 
The Auditor may at his discretion call for additional information, and 
for additional reports at any time. The Auditor must make an examina- 
tion of each company annually, and may make examinations oftener if 
he thinks best. The annual statements, in condensed form, must be pub- 
lished by the Auditor at the expense of the companies, once a week for 
three consecutive weeks in two newspapers of general circulation, one 
printed in Springfield, and one in the county seat of the county in which 
the company is located. 

Trust companies which do a banking business are, as above stated, 
organized under the banking laws, and as to their banking departments 
are subject to the provisions of such laws. 

(Annotated Statutes, 1913, paragraphs 2559-2577.) 



408 TRUST COMPANIES. 

Indiana. 

Ten or more persons may incorporate a trust company. They shall 
file articles of association with the Secretary of State. The amount of 
capital shall be at least $100,000 in cities of over 50,000 inhabitants; at 
least $50,000 in cities of between 25,000 and 50,000 inhabitants, and at 
least $25,000 in cities of less than 25,000 inhabitants. Maximum limit, 
$2,000,000. The capital must be divided into shares of $100 each. 
Where it does not exceed $100,000 it must be fully paid. Stockholders 
are subject to double liability. The directors shall number not less than 
six. Each must own at least ten shares of stock, and a majority must be 
citizens of the State. Powers specified, to hold real estate and personal 
property such as is necessary for the convenient transaction of its busi- 
ness, for the use and occupation of officers and employees and for the 
safe-keeping of its assets, deposits and property held in trust, and such 
as is acquired in satisfaction of debts; trust property may be invested in 
real estate only if the instrument creating the trust so specifies; to hold 
real or personal property in trust, however received and from whatever 
source — whether courts, corporations or persons — upon trusts created in 
accordance with the laws of the State and of the United States ; to ex- 
ecute trusts for married women in respect to their separate property, 
and to act as agent in the management of such property; to act as fiscal 
and transfer agent and registrar; to conduct a fidelity insurance busi- 
ness; to act as depository of the funds in charge of State, municipal or 
corporation officials or other officials or private persons; to act as trustee, 
assignee, receiver, administrator, executor, guardian of the person or es- 
tate of minors, guardian of the estate of lunatics, imbeciles, spendthifts, 
habitual drunkards or other persons disqualified or unable to manage 
their estates; courts are given authority to make such appointments, and 
no bond or security is necessary to enable a trust company to accept such 
appointments; to act as general agent and attorney in fact for public 
or private corporations or persons in the management of real estate and 
personal property; to receive, under specified conditions, trusts resigned 
by others; to receive savings deposits under the same regulations regard- 
ing repayment as savings banks ; to invest deposits and trust funds at the 
discretion of the directors in such personal securities as are not hereinafter 
expressly prohibited, but special directions or agreements imposed by order 
of court, will, contract, etc., must be followed. Trust companies are "for- 
bidden" to "engage in any banking, mercantile, manufacturing or other 
business, except such as is hereby expressly authorized" ; provided that 
promissory notes, etc., made negotiable by the laws of the State when 
payable at a bank shall also be negotiable if payable at a trust com- 
pany. They shall not loan to directors, officers, agents, or employees, or 
allow them to become indebted to the company. Interest at not less than 
three per centum per annum shall be allowed on all trust funds of $100 or 
over remaining with the company uninvested for over six months. Such 



STATE AND TERRITORIAL LAWS. 409 

corporations are subject to the orders of courts committing trusts to 
them. They must render to the Auditor of State at least five reports 
during each year, according to the form which may be prescribed by him, 
and the same must be published in a local newspaper. Corporations not or- 
ganized under the provisions of this act are forbidden to use the word 
"trust" in their titles. Shares of trust company stock are to be assessed 
in the town or city where they are located, and taxed at the same rate as 
other property in the locality. Such companies must render to the local 
assessor, between March 1 and May 15 each year, a statement giving the 
number of shares and estimated cash value of same, less real estate or 
other tangible property at its assessed value. Foreign companies may 
operate after procuring a certificate of authority from the Auditor of 
State. Before such certificate is issued, certain statements and informa- 
tion must be filed with the Auditor, who must satisfy himself of the 
solvency and the safety of the company. Such corporation must deposit 
with the Auditor securities to the value of $25,000 to remain for one 
year; and thereafter must keep with the Auditor securities equal in value 
to the amount of its liabilities to citizens of the State. If the company 
becomes insolvent or fails to carry out its agreements, the Auditor shall 
revoke its authority to do business in the State and apply to the proper 
court for a receiver to take charge of the deposit above mentioned. Trust 
companies are under the supervision of the Board of Bank Examiners, 
who work under the direction of the Auditor of State. They are to be 
examined, thoroughly "as often as shall be necessary", no previous notice 
of the proposed examination being given. The fees for examination are 
paid by the companies as examined. Trust companies receiving commer- 
cial deposits payable upon demand and subject to check must maintain 
in cash or on deposit a reserve of fifteen per cent, of the aggregate 
amount of such commercial deposits. 

(Burns' Annotated Statutes, Revision of 1914, chapter 37, sections 
4942-4962c. Acts of 1913, March 13, March 14, March 15.) 

IOWA. 

This State had very little legislation regarding trust companies prior 
to 1913, when an act was passed conferring additional powers. Under 
the provisions of this act, trust companies, State and savings banks, when 
so authorized by their articles of incorporation, have the following pow- 
ers: To be appointed assignee or trustee by deed, and guardian, execu- 
tor or trustee by will; to be appointed receiver, assignee, guardian (of 
estate only), administrator or other trustee by courts; to act as fiscal 
agent, transfer agent and registrar; to accept and execute any legal 
trusts or powers entrusted to them by persons, corporations or courts, 
and to hold, manage and dispose of real and personal property in con- 
nection therewith; to act as depositary of court funds; to issue drafts 
upon depositories, and to purchase, invest in and sell promissory notes, 
bills of exchange, bonds and mortgages and other securities; to do a 

27 



410 TRUST COMPANIES. 

safe deposit business. In acting as fiduciary, the company shall have 
the same rights, powers and privileges as individuals so acting, shall re- 
ceive the same compensation as fixed by the statutes, and shall give the 
same bonds as are required of individuals. Assets held in trust must be 
segregated. Deposits made by one person in trust for another, the bank 
having no other notice of the existence of a valid trust, may be paid to 
the person for whom the deposit was made, provided that if such person 
be a minor, he may not draw the funds during his minority without the 
consent of the legal representatives of the trustee. 

Corporations exercising these powers must have the words "trust," 
"State" or "savings" incorporated in their names; no persons 
or corporations not complying with this act may use the 
word "trust" in their names. The beneficiaries of any trust 
held by such a corporation may, with the approval of the 
court, appoint a practicing attorney to look after their legal interests, 
said attorney to receive his fees out of the trust estate. Before the dec- 
laration of dividends, one-tenth of net profits must be carried to surplus 
until it equals twenty per cent, of the capital. 

Five or more persons may incorporate a trust company. The direct- 
ors must number not less than five, nor more than nine, three-fourths of 
whom must be citizens of the State. The number of shares required to 
be held by each varies with the capital of the company, being from 
one to five shares. The capital required is $10,000 in cities or towns of 
less than 10,000 inhabitants, and $50,000 in larger cities. Stockholders 
are subject to double liability. 

The aggregate deposits may not exceed twenty times the paid-up 
capital and surplus. Deposits (other than those in trust or with special 
provisions) cease to draw interest when they have been inactive for ten 
years. Minors and married women may control their deposits. Joint 
deposits may be paid to either, whether the other be living or dead. 

If the company does both a savings and commercial banking busi- 
ness, the reserve required is fifteen per cent, of commercial deposits and 
eight per cent, of savings deposits in towns having a population of less 
than 3,000; and twenty per cent, of commercial deposits and eight per 
cent, of savings deposits in larger places. If doing a savings business 
only, the reserve required is eight per cent, of deposits. Three-fourths 
of the reserve may be kept on deposit with State or National banks. 

Loans to one person or interest may not exceed twenty per cent, of 
the paid-up capital, bona fide discounts excepted; provided that loans 
up to fifty per cent, of the capital may be made on notes secured by 
mortgage on unincumbered farm land in the State worth double the 
amount loaned thereon. 

Trust companies are subject to the same regulation as other State 
banks by the State Bank Examiners, who are appointed by and work 
under the direction of the Auditor of State. 



STATE AND TERRITORIAL LAWS. 411 

They are subject to examination at least once a year, and are re- 
quired to render reports to the Auditor as of specified past dates, five 
times a year. The Auditor may call for sjjecial reports at his discretion. 
The reports must be published in a local newspaper. The directors are re- 
quired to have the company examined by an examining committee ap- 
pointed from their members at least once each quarter. One of these 
examinations must be held in June, and one in December, and reports of 
these examinations must be made to the Auditor of State. Section 1872 
of the code provides for quarterly reports to the Auditor of State. 

(Laws of 1904, chapter 85; Laws of 1906, chapter 81; Laws of 
1907, chapter 92; Laws of 1909, chapter 115; Laws of 1911, chapters 
68, 83, 84; Laws of 1913, chapter 152. Nearly all of the provisions 
regarding trust companies are found in section 1889 of the code and in 
chapter 152 of the Laws of 1913, which makes several sections of the 
code applicable to trust companies.) 

Kansas. 

Trust companies are organized under the provisions of the general 
corporation laws, but governed and regulated by the provisions of the 
trust company law. Powers specified, to receive moneys in trust; minors 
may control their deposits; to do a safe deposit business; to "accept and 
execute all such trusts and to perform all such duties of every descrip- 
tion as may be committed to them by" persons, corporations or courts; 
to hold real or personal property in trust; to execute and guarantee 
bonds required to be given by public officers or in proceedings in the 
courts, provided that the liability so incurred shall not be in a sum ex- 
ceeding one-fourth of the paid-up capital ; 40 per centum of the premiums 
must be set aside as a guaranty fund, specially invested; to act as agent 
for the investment of money; to act as transfer agent and registrar, as- 
signee, receiver, trustee, depository, fiscal agent, bond trustee; "and 
generally to have and execute such powers as are usually had and ex- 
ercised by trust companies"; to act as guardian or curator of any infant, 
insane or other person subject to guardianship; to act as executor, trus- 
tee under will, administrator; to conduct a fidelity insurance business and 
a title insurance business; to loan money on real or personal security; to 
execute and issue its notes, bonds or debentures under certain restric- 
tions; to buy and sell municipal and corporate bonds and all kinds of 
stocks and securities; provided, that it shall not loan money upon or 
purchase its own stock unless to prevent loss upon a debt previously con- 
tracted, in which case it may not hold such stock longer than six months, 
and the same shall not be included in assets for longer than six months; 
"to receive deposits of money from any bank, Savings bank, trust com- 
pany or from any public officer or board subject to check, or from any 
person, company, corporation or association upon time certificates of de- 
posit"; to buy and sell foreign and domestic exchange, gold, silver, 
foreign coin or bullion; provided, that the total investment in bank stocks 
shall not exceed one-fourth the paid-up capital. 



412 TRUST COMPANIES. 

Trust companies must keep a reserve of twenty-five per centum of de- 
posits subject to check, and ten per centum of time deposits, subject to 
the same rules as State banks, but part of the reserve may be in United 
States bonds or in loans secured by United States, State or municipal 
bonds, in lieu of deposits in banks. The capital must be not less than 
$100,000 nor more than $1,000,000, divided into shares of $100 each; 
20 per centum must be paid in before beginning business, and the 
balance within six months. The name of any such company must com- 
mence with the word "the", and end with the words, "trust company". 
None but companies complying with and organized under the trust com- 
pany laws may use the word 'trust" in titles. The directors may be from 
five to twenty-five in number; a majority of them must be residents of 
Kansas, and each must own not less than $1,000 of stock. They must take 
an oath of office. Before dividends are declared ten per centum of the net 
earnings must be carried to surplus fund until the latter equals one-half 
of the capital. The company may own real estate for its own use, and 
such as is acquired in the collection of debts, but the total amount shall 
not exceed in value 50 per centum of the capital for more than six 
months. Trust companies are under the supervision of the Bank Com- 
missioner, to whom they must make four reports yearly, and are subject 
to examination by him the same as banks, at least once per annum. The 
banking law applies to them regarding impairment of capital and in- 
solvency. In the absence of special provisions in this act, the general 
corporation act shall apply. 

Joint deposits in banks and trust companies may be paid to either, 
whether the other be living or not. Trust companies may reorganize as 
State banks, and take advantage of the guarantee of deposits law, which 
is found in chapter 61 of the Laws of 1909 as amended by chapter 61, 
1911. 

(Laws of 1901, chapter 407; Laws of 1903, chapter 528; Laws of 
1907, chapter 425; Laws of 1911, chapters 64, 65, 134; Laws of 1913, 
chapter 67.) 

Kentucky. 

Companies may be incorporated either to do a trust business, or to do 
both a banking and a trust business. For the former, seven or more cor- 
porators are required. The capital must be not less than $15,000 in 
counties whose population is from 25,000 to 40,000; not less than $100,- 
000 in counties of from 40,000 to 100,000 population, and not less than 
$200,000 in counties having a larger population; provided, that in coun- 
ties having a population of 25,000 or more, trust companies may be or- 
ganized with a capital of $25,000 in cities of the fourth, fifth or sixth 
class. Fifty per centum of the capital must be paid in, and the balance 
within one year. Copies of the articles of incorporation must be filed 
with the clerk of the county, and with the Secretary of State. Powers 
specified, to have the powers usual with corporations; "to exercise, sub- 



STATE AND TERRITORIAL LAWS. M3 

ject to law, such powers as may be necessary to carry on its business": 
to act as guardian of infants, executor, administrator or curator of es- 
tates of decedents, "committee of persons of unsound mind, receiver or 
trustee for persons or estates"; to act as agent or attorney for the man- 
agement of estates, the collection of rents, accounts, etc., "and demands 
of every character" ; to receive on deposit or for safe-keeping, gold, 
silver, money and other personal property. Such corporations are for- 
bidden to loan on their own stock, and to purchase same except to pre- 
vent loss on a debt previously contracted, in which case such stock shall 
not be held longer than one year. No person shall be allowed to be- 
come indebted to the company in a sum exceeding ten per centum of the 
paid-up capital and surplus, except that on good collateral or mortgage 
security the sum may be increased to 20 per centum. If the borrower 
is a director or officer of the company, he shall not be permitted to be- 
come indebted to the company in excess of ten per centum of paid capital 
and surplus, unless the excess be secured by mortgage or pledge of real 
or personal property double in value the amount of such excess. When 
acting in trust capacities whose duties are regulated by law or subject 
to the control of courts, trust companies shall be subject to the same 
duties and responsibilities, have the same rights and powers, and receive 
the same compensation as would individuals acting in like capacities. 
But upon bonds required to be executed in such cases the capital stock of 
the company shall be taken as the only security required, unless the 
court or some party in interest demands more. A trust company may 
hold real estate needed for its business, and for a period not longer than 
five years such real estate as is acquired in the satisfaction of debts due 
it. It may hold, operate, and manage real estate for others. Such com- 
panies are forbidden to engage in banking, or to buy or sell bills of 
exchange. 

Companies may, however, as above stated, be incorporated to do 
"both a banking business and a trust company business." Such a 
corporation must have a paid capital of at least $50,000 before com- 
mencing business, except that if the subscribed capital is $100,000 or 
over, one-half must be paid before commencing business, and the balance 
within a year. One-half of such capital "shall be securely invested for 
the trust business of the corporation, and shall at all times be kept 
separate and distinct from its other assets, and shall be primarily liable 
for its fiduciary obligations." The remainder of the capital may be 
used for its banking business, and the books must be so kept as to at all 
times show the condition of its banking business and of its trust busi- 
ness. The banking department is governed by the banking laws, and 
the trust department by the trust company laws. Stockholders are sub- 
ject to double liability. A list of the stockholders and officers must be 
filed in Januar}^ of each year with the Secretary of State. The capital 
and funds not held in a fiduciary capacity may be invested at the dis- 
cretion of the directors; the trust funds, under order of court or as pro- 



414 TRUST COMPANIES. 

vided by law for the investment of other trust funds. Under a statute 
passed in 1909, thirteen or more persons may become incorporated to 
conduct "both a general banking business, a trust company business and 
a real estate title insurance business." Capital required, $150,000. Not 
less than $50,000, and never more than one-third or less than one-tenth 
of the capital shall be used in its business of real estate title insurance. 
Of the remaining capital, one-half "shall be securely invested for the 
trust business of the corporation," and be primarily liable for its fidu- 
ciary obligations; the other half being used in the banking business. The 
books of the departments must be kept separate, and each department 
is subject to the laws relating to its kind of business. 

All classes of financial institutions, including trust companies, are 
under the supervision of the Banking Commissioner. He must examine 
each company at least once a year, but not to exceed twice a year unless 
he has reason to believe that the company is not complying with the 
laws. They must render to him reports giving information outlined in 
the statute, as of days designated by him. These reports must not ex- 
ceed five in a year, unless for cause, when he may call for additional 
reports. He must, however, make at least two calls each year. The 
reports must be published in a local newspaper. The passing of fraud- 
ulent checks, and the malicious circulation of false rumors regarding 
banks or trust companies are misdemeanors. 

Banks and trust companies are authorized to become members of a 
Federal Reserve Bank. They must keep a reserve of twelve per cent. 
of total demand deposits and five per cent, of total time and savings de- 
posits ; and if located in cities which are reserve or central reserve cities 
under the Federal Reserve Act, the percentages of reserve must be 
fifteen and five respectively. One-third of the reserve must be in cash, 
and the balance may be on deposit. 

(Statutes, 1903, §§603-616. Laws of 1904, chapter 78. Laws of 
1906, chapters 22, 46 and 146. Laws of 1909, chapter 108. Laws of 
1912, chapters 4 and 41. Laws of 1914, chapters 8. 16, 34 and 45.) 

Louisiana. 

Five or more persons may incorporate for the purpose of conducting 
a savings, safe deposit and trust banking business. A certificate of 
authority must be obtained from the State Examiner of State Banks. 
One-half of the subscribed capital must be paid in before commencing 
business, and the balance within ninety days. Powers specified, to have 
succession for a period specified in the articles of incorporation, not to 
exceed ninety-nine years; to have the other ordinary powers of corpora- 
tions; to hold real and personal property needed or convenient for the 
purposes of the association; the real estate that may be held is limited 
to such as is necessary for the proper transaction of the business and 
such as is acquired in satisfaction of debts, but the latter may not be held 
more than ten years ; to accept and execute "trusts and agencies of any 



STATE AND TERRITORIAL LAWS. 415 

and every description which may be committed or transferred with their 
consent to them by any person or persons, corporation, board or body, 
public or private,"or by State or United States courts; to act as 
executor, administrator, syndic, receiver, curator, tutor, trustee or 
assignee, "in the same manner and to the same extent and under the 
same conditions that natural persons may be so appointed" ; but as 
curator of an interdict or tutor of a minor, it shall have charge of the 
estate only, not of the person, and the commissions allowed by law shall 
be equally divided between the company and the persons having charge 
of the person; to act as depository of funds held by persons or officers 
acting as fiduciaries; to do a banking business. 

Regarding the trust business that may be undertaken, it is to be 
noted that the constitution and laws of the State prohibit trusts, as they 
exist elsewhere under the common law; and the trust company act spe- 
cially provides that nothing therein "shall be construed as authorizing 
the constitution of any agency or trust in this State which is contrary to 
the public policy of the State of Louisiana, or which seeks to place the 
property of persons or estates in this State out of commerce, in con- 
travention of the laws of inheritance of this State, or of the prohibitions 
therein contained against fidei commissa and substitutions." 

The number of directors must be not less than five nor more than 
thirty; each must own $100 par value of stock. The capital of the com- 
pany, where it acts in fiduciary capacities, is to be taken as the security 
required by law for the faithful performance of duty; but the court may 
require other security. Money or property deposited by married women 
or minors is subject to their control. The company must keep a reserve 
of 25 per centum of its demand deposits. Of this eight per centum 
must be on the premises in cash. The remainder of the reserve may 
consist of deposits in other banks, or bills of exchange, or discounted 
paper maturing within not more than one year, or in State, United States 
or municipal bonds. The capital must be at least $100,000. 

Such companies have the powers and are subject to the regulations 
and liabilities of State banks. They may have branches within the limits 
of the municipality or parish. Trust funds may be invested in United 
States or State bonds, county, municipal and other public bonds of 
Louisiana and other States that are quoted at or above par and have not 
defaulted in interest for two years; stocks of railroads, canals and other 
quasi-public corporations quoted at or above par and having paid interest 
at not less than four per centum for five years ; or in first mortgages on real 
estate appraised at double the amount of the loan and said mortgages 
running not longer than ten years. Trust funds or property must not 
be included in the published assets of the company. Reports as of a 
specified past day must be made, on call of the State Examiner, four 
times a year, and must be published in a local paper. Examinations are 
made by the same official, at least twice a year. The Directors must make 



416 TRUST COMPANIES. 

an examination once each six months. Loans to any one borrower, ex- 
cept loans on "good collateral or solvent endorsements/' are restricted to 
20 per centum of the capital, surplus and undivided profits. No loans 
may be made to officers or employees, unless approved by the Directors 
at a meeting at which the applicant is not present. Before declaration 
of a dividend, one-tenth of the profits must be added to the surplus un- 
til the latter equals 20 per centum of the capital. Dividends must be 
earned during the dividend period, unless the undivided profits are 
enough to pay the dividend and all losses. All loans, discounts, over- 
drafts and other debts past due more than twelve months, and on which 
interest has not been paid, must be classed as bad debts, and be either 
charged off or reduced in value after an appraisement by the Bank 
Examiner and two stockholders, before a dividend is declared. 

Banks and trust companies are forbidden to advertise the authorized 
or subscribed capital without stating the amount paid in. They may not 
certify checks unless funds to cover them are on deposit. Deposits draw- 
ing interest at the rate of five per cent, per annum or more must be 
carried on the books and reported in statements as "borrowed money." 
Passing bogus checks on banks and trust companies is punishable by 
imprisonment. 

None but corporations under the supervision of the State Bank Ex- 
aminer may use the word "trust" in titles. 

(Laws of 1902, Act No. 45. Act No. 179; Laws 1904, Act No. 40; 
Laws 1906, Act No. 140; Laws of 1908, Acts 188, 251, 288; Laws of 
1910, Acts 112, 144, 145, 152, 193 and 238; Laws of 1912, Acts 43, 48 
and 96. Laws of 1914 not examined.) 

Maine. 

Until late in the year 1907. trust companies in this State were in- 
corporated only by special acts of the Legislature, their powers being 
defined in such special charters. They may now be incorporated under 
the provisions of the elaborate trust company law, approved March 21, 
1907. The number of corporators required is five or more. The powers 
specified are to receive deposits and to allow interest thereon; to borrow 
money; to loan money on credits or real estate or personal security, and 
to negotiate loans and sales for others; to do a safe deposit business; to 
hold and enjoy real or personal or mixed property; to act as transfer 
agent or registrar; to execute trusts of every description and to hold 
property in connection therewith; to act as assignee, receiver, executor, 
"and no surety shall be necessary upon the bond of the corporation, un- 
less the court or officer approving such bond shall require it" ; "to do in 
general ail the business that may lawfully be done by trust and banking 
companies." Capital required, $25,000 in a town of not more than five 
thousand inhabitants; $50,000 in cities of from five to ten thousand 
inhabitants; $75,000 in cities of from ten to twenty thousand in- 
habitants; $100,000 in cities of from twenty to thirty thousand in- 



STATE AND TERRITORIAL LAWS. 417 

habitants; $150,000 in larger cities. The shares must have a par value 
of $100 each. No stock shall be issued until its par value has been paid 
in in cash. 

The number of directors shall be at least five, two-thirds of whom 
must be residents of the State, and each of whom shall own at least ten 
shares of stock. The stockholders may at their option elect from the 
Board of Directors an Executive Committee of not less than five mem- 
bers. The Board of Directors or the Executive Committee shall con- 
stitute the board of investment of the company, and shall keep records 
of all loans and investments, which record shall be submitted to the 
directors,, stockholders and bank examiner. 

A separate trust department must be maintained, and all trust moneys 
and property be kept separate. Persons holding fiduciary appointments 
may deposit their funds or securities with a trust company. Loans to 
one person, firm., business syndicate or corporation may not exceed 
ten per centum of the total capital, unimpaired surplus and net undivided 
profits, "except on approval of a majority of its entire investment board, 
unless secured by collateral, nor in excess of 25 per centum there- 
of, except on such approval and secured by collateral which in the 
judgment of said majority of said investment board shall be of a value 
equal to the excess of said loan above said 25 per centum;" pro- 
vided., that in determining said amount every name appearing on any 
loan as endorser, guarantor or surety shall be regarded as an original 
promissor. Bo7ia fide discounts are not regarded as money borrowed. 
In all cases where loans in excess of ten per centum are granted, the 
records must show who voted in favor thereof. Loans in any form to 
officers, directors or employees may be made only after approval of a 
majority of the board of directors or executive committee, and the names 
of those voting for such loans shall be spread upon the minutes. The 
applicant for the loan or anyone associated or connected with him may 
not be regarded as voting for the loan. 

Trust companies are required to make and publish reports as directed 
by the bank examiner. Annual examinations by two of the directors, 
under the direction of the bank examiner, are required. Joint examina- 
tions of State and National banking institutions occupying the same 
rooms must be made at least once a year. The examiner must visit each 
company for the purpose of examination once a year, or oftener if he 
deems it expedient. In addition, a thorough audit of the assets and lia- 
bilities of the savings deposits must be made annually by an expert ac- 
countant designated by the Bank Commissioner, and the books of the 
savings depositors must be verified every three years. Branches may 
not be established outside the city or town in which the company is 
located, without special warrant from the bank examiner, and in any event 
a trust company may not establish branches outside of its own and an ad- 
joining county. Every director, officer, agent or employe who authorizes, 
or assists in procuring, granting or causing the granting of a loan in vio* 



418 TRUST COMPANIES. 

lation of the law as stated above relating to loans to directors or officers, 
every director who votes on same, and every director, officer, agent or 
employee who wilfully and knowingly pays out funds or permits or 
causes same to be done on loans in violation of said provisions, "shall 
be personally responsible for the payment thereof, and shall be guilty 
of a misdemeanor". 

For purposes of taxation, trust companies are required to make re- 
turns to the State assessors semi-annually. Money deposited in trust 
companies by minors or married women is subject to their order. Joint 
deposits may be paid to either depositor, whether the other be living or 
not. Such corporations are forbidden to act as administrator or guar- 
dian, anything in their charters to the contrary notwithstanding. They 
must keep a reserve of 15 per centum of aggregate deposits payable on 
demand or within ten days. The stockholders are subject to double 
liability. Trust companies maintaining savings departments must strict- 
ly segregate assets equal to the aggregate amount of such deposits, and 
not mingle same with other assets. The fraudulent issue of checks on 
banks and trust companies is punishable by fine or imprisonment. 

The laws of this State relating to "trust and loan associations" do 
not refer to trust companies, but to building and loan associations. 

(Revised Statutes, chapter 46; Laws 1889, chapter 312; Laws 1893, 
chapters 281 and 293; Laws 1895, chapter 48; Laws 1897, chapters 218, 
247, 259; Laws 1899, chapter 68; Laws 1901, chapters 196, 286; Laws 
1905, chapter 171; Laws 1907, chapters 96, 119; Laws 1909, chapter 
20; Laws 1911, chapters 32, 158; Laws 1913, chapter 5.) 

Maryland. 

In 1890, this State repealed a general statute under which trust 
companies had been incorporated, and from 1890 until 1910 such com- 
panies were incorporated only by special acts of the Legislature. In 
1910, however, a general law for the incorporation of trust companies 
was again enacted. 

Eleven or more persons may form a corporation to be known as a 
trust company. Capital required, in cities or towns of less than 25,000 
inhabitants, $100,000; in cities of from 25,000 to 100,000 inhabitants, 
$150,000; in cities of from 100,000 to 250,000 inhabitants, $200,000; 
and in larger cities, $500,000. Powers specified: To act as fiscal agent, 
transfer agent and registrar; to receive deposits of trust moneys and 
other personal property and to loan money on real or personal securi- 
ties and to receive money on deposit; to hold real estate necessary for 
the business or such as is acquired in satisfaction of debts; to act as 
trustee under mortgages and bond issues; to execute trusts for mar- 
ried women in respect to their separate property; to act under order of 
court as guardian, receiver or trustee of the estate of any minor or 
other person, and as depositary of moneys paid into court; to accept 
and execute legal trusts of any nature entrusted to it by any court, per- 



STATE AND TERRITORIAL LAWS. 419 

son, corporation or other authority, and to hold any property or estate 
which may be the subject of any such trust; to purchase and sell stocks, 
bills of exchange, bonds, mortgages and other securities; to act as execu- 
tor, trustee or administrator, and as committee of the estates of lunatics, 
idiots, etc. Courts are authorized to make such appointments. No 
bond for the execution of such trusts is required. 

Trust companies must be managed by a board of from eleven to 
thirty directors, each of whom must own stock to a par value of $500. 
They must keep a list of stockholders showing the amount of stock held 
by each open to the inspection of stockholders. Loans to any person, co- 
partnership or person may not exceed twenty per cent, of capital and 
surplus, bona fide discounts excepted; but upon vote of two-thirds of the 
directors the amount may be increased to not exceeding thirty per cent, 
upon approved security. Loans to officers or employees may be made 
only by resolution of the directors or upon sufficient security. It is 
unlawful to certify checks unless the amount thereof is on deposit. Be 
fore the declaration of a dividend, one-tenth of net profits must be car- 
ried to surplus until it equals twenty per cent, of the capital stock. 
Stockholders are subject to double liability. Deposits made by minors 
and married women may be controlled by them. Deposits made by 
one person in trust for another, with no further notice of the existence 
of a valid trust, may be paid to the person for whom the deposit was 
made. Joint deposits may be paid to either, whether the other be living 
or not. The use of words in titles indicating a bank or trust company is 
forbidden except to corporations subject to the supervision of the Bank 
Commissioner. No bank or trust company may carry for longer than 
ninety days bills payable in an amount greater than its paid-in capital, 
if its capital is $100,000 or more, or greater than its paid-in capital and 
surplus, if its capital is less than $100,000. Trust companies must 
maintain a reserve of ten per cent, of demand deposits which shall be 
kept on deposit with banks or trust companies designated by the di- 
rectors; and also an additional reserve of five per cent., to be kept either 
on deposit or invested in bonds of the United States, the State of 
Maryland or county or municipal corporations in the State. Trust com- 
panies are required to deposit with the State Treasurer, bonds of the 
United States, the State of Maryland, the city of Baltimore or of any 
county or municipal corporation in the State, which bonds shall be held 
by the Treasurer in trust as security for the depositors and creditors of 
the company. The amount of such deposit is ten per cent, of the paid 
capital and not less than $10,000, for companies with a capital of $100,- 
000 or less; fifteen per cent of the paid capital and not less than $30,- 
000, for other trust companies ; but a trust company transacting as part 
of its business the security or guarantee business must make such de- 
posit in the amount of $100,000. 

Trust companies and banks are under the supervision of the Bank 
Commissioner, to whom they must make at least five reports each year, 
on his call, according to forms prescribed by him, which shall conform 



420 TRUST COMPANIES. 

as nearly as practicable to those required of National banks. The re- 
ports must be published in a local newspaper. The Commissioner must 
examine each company once a year, and whenever he considers it ex- 
pedient, or when requested by the directors of a company. 

(Maryland Code, Public General Laws, 1904, Article XI. and Arti- 
cle XXIII, section 98. Acts of General Assembly, 1910, chapter 219; 
Acts of 1912, chapter 194; Acts of 1914, chapter 805. See Annotated 
Code, 1914, Article 11, sections 50 and 51.) 

Massachusetts. 

Trust companies, which in this State were formerly incorporated 
only by special act of the Legislature, may, by an act passed in May, 
1904, be incorporated under the general law. Fifteen or more persons 
may incorporate. Notice of intention to organize a trust company must 
be given to the Board of Bank Incorporation, consisting of the Bank 
Commissioner, the Treasurer and Receiver-General, and the Commissioner 
of Corporations, and must be published. The procedure for organization 
is set forth at length in the statute. No shares of stock shall be issued 
until the par value thereof is paid in full in cash. The amount of the 
capital shall not be less than $200,000, nor more than $1,000,000; except 
that in cities or towns of a population not greater than 100,000 the capital 
stock may be not less than $100,000, and in towns whose population is 
not more than 10,000 the capital stock may be not less than $50,000. 
When the entire capital stock is paid for and issued, a list of stockholders 
with addresses and number of shares held must be filed with the Board 
of Bank Incorporation, who, if satisfied that the law has been complied 
with, issue a certificate authorizing the corporation to begin business. No 
corporation not duly authorized may advertise business as a trust company. 
Officers of the corporation shall be sworn to the faithful performance of 
their duties. Each director must own at least ten shares of unpledged 
stock, and a majority of them must be citizens and residents of the 
Commonwealth and not more than a third may be directors in any other 
such corporation. The books of the company must at all reasonable 
times be open to the inspection of stockholders and beneficiaries under 
trusts. Trust companies in Boston, within a distance of three miles 
from the State house must keep a reserve of 20 per centum of 
aggregate deposits less time deposits not payable within thirty days; 
trust companies elsewhere in the State must keep reserves of 15 per 
centum. Two-fifths of the reserve must be in cash on hand. The re- 
mainder may be on demand deposit with Boston trust companies duly 
authorized as reserve agents, or with National banks in Massachusetts 
or in the cities of New York, Philadelphia, Chicago or Albany. A por- 
tion of the reserve not exceeding one-fifth may consist of bonds of the 
United States or of Massachusetts: provided, that the aggre- 
gate cash reserve must always equal five per centum of the total time 
and demand deposits, exclusive of deposits in the savings department. 



STATE AND TERRITORIAL LAWS. 421 

Any Boston trust company may be authorized by the Bank Commissioner 
to act as reserve agent for other trust companies in the state. Such re- 
serve agent trust companies must keep one-half of their reserves in cash, 
and the balance may be on demand deposit with other Boston reserve 
agent trust companies or with the National banks above described. 

Powers specified, to receive on deposit, storage or otherwise, money,. 
Government securities, stocks, bonds, coin, jewelry, plate, valuable 
papers and documents, evidences of debt, and other property of any 
kind; to collect and disburse income or principal; on deposits of money 
so received it shall not give collateral or other security; to advance money 
on credits on real property in the State or on personal security ; to invest 
in stocks, bonds or other evidences of indebtedness of corporations; but 
"no trust company shall advance money or credits upon notes secured by 
deed of trust or by mortgage upon farms or agricultural or unimproved 
land outside of this Commonwealth, except upon land situated in the 
New England States or the State of New York, nor invest in nor make 
loans upon securities of a company negotiating or dealing in such notes 
so. secured or in such mortgages"; and "no trust company shall as 
agent, buy, sell or negotiate securities or evidences of debt on which said 
company may not lawfully advance money or credits, nor as such agent 
buy, sell or negotiate evidences of debts secured by real estate under 
mortgage or deed of trust" ; to act as depository of court and trust 
funds; if court funds remain unclaimed for a period of more than ten 
years, the court may upon motion of the Attorney-General order same 
to be paid to the Treasurer and Receiver-General to hold for the owners ; 
to act as executor, administrator, receiver, assignee, guardian, conservator 
or trustee "under the same circumstances, in the same manner, and subject 
to the same control by the court having jurisdiction of the same, as a 
legally qualified person" ; any such appointment as guardian shall apply 
to the estate and not to the person of the ward; to act as transfer agent, 
registrar, fiscal agent, trustee under bond issues. Trust funds may be 
invested only in authorized loans of the United States, or of any of the 
New England States, Illinois, Iowa, Michigan, Minnesota or Wisconsin, 
or the cities or counties thereof, or stocks of State or National banks or- 
ganized within the Commonwealth, or in the first mortgage bonds of a 
railroad incorporated in any of the New England States and whose 
road is located wholly or in part in the same and which has earned and 
paid regular dividends on all its stocks for two years, or in the bonds of 
any such railroad company unencumbered by mortgage, or in first mort- 
gages on real estate in this Commonwealth, or in any securities in which 
Savings banks may invest, or upon notes with two sureties of domestic 
manufacturing corporations or of individuals with a sufficient pledge as 
collateral of any of the aforesaid securities; but real estate acquired by 
foreclosure, etc., shall be sold at public auction within two years. 

The capital and liability of stockholders shall be held as security for 



422 TRUST COMPANIES. 

the faithful performance of duties in trust capacities, and no surety 
shall be required upon bonds filed by such corporations, except that the 
court may at its discretion, upon application of interested parties, re- 
quire additional security where the company is by it appointed as ex- 
ecutor, administrator, receiver, assignee, or guardian. The company must 
be governed in the matter of investment of trust funds by the directions, 
if any, of persons creating trusts. A trust department must be main- 
tained for the purpose of keeping separate the trust funds and property 
and the accounts thereof. If savings deposits are received, a separate 
savings department must be maintained, whose assets shall be appro- 
priated solely to the security and payment of such deposits, the accounts 
and transactions of the department being kept separate. Ninety days' 
notice may be required for withdrawals in this department. Trust com- 
panies chartered subsequent to May 21, 1896, must annually set apart 
ten per centum of net earnings to a guaranty fund until same equals 25 
per centum of the capital, which fund shall be invested in the same 
manner as deposits in Savings banks may be invested. With companies 
chartered prior to that date, the creation of such guaranty fund seems to 
be optional, but the fund once established must be maintained as long as 
trust undertakings remain unfinished. The guaranty fund shall be ab- 
solutely pledged for the faithful performance of trust duties, and trust 
creditors have in addition thereto an equal claim with other creditors 
upon the capital and other property of the corporation. Stockholders 
are subject to double liability. No such corporation shall loan upon its 
own stock, or purchase same, except to prevent loss upon a debt pre- 
viously contracted in good faith, in which case the stock shall within six 
months be sold at public or private sale. The total loans to one person 
or firm shall not exceed one-fifth of the paid capital and surplus, where 
the capital of the company is $50,000, or over, nor one-fifth of the 
capital of companies with a smaller capital; but bona fide discounts shall 
not be considered as money borrowed. Such corporation may hold real 
estate unencumbered by mortgage, for its use, to an amount not exceed- 
ing 25 per centum of its paid capital and surplus, and in no case exceed- 
ing $250,000; but investments legally made prior to April 18, 1894, need 
not on this account be changed. Branch offices for receipts of deposits, 
payment of checks and transacting a safe-deposit business, only, to be 
conducted in the same city where the main office is located, but not else- 
where, were formerly permitted; and may be continued, if heretofore 
authorized; but after January 1, 1909, a trust company may be author- 
ized to have one such branch only. Reports must be made on call of the 
Bank Commissioner, not exceeding five times within any calendar year, 
giving full information detailed in the statute. For purposes of taxation, 
they render an annual report in May. Such companies are subj ect to exami- 
nation by the commissioners the same as Savings banks; i. e., annually 
and whenever the commissioner deems it wise. The stockholders of every 



STATE AND TERRITORIAL LAWS. 423 

trust company are required to elect each year an examining committee 
of three stockholders who are not members of the executive or finance 
committees, nor the president, vice-president, secretary or treasurer of 
the company. At least once a year, without previous notice to the officers 
or directors, this committee must make or cause to be made a thorough 
examination of the company's affairs. Upon application by this commit- 
tee or by the directors, the Commissioner may have a special audit made. 

Trust companies having savings deposits are required to pay an an- 
nual tax on deposits in accordance with the law for taxation of deposits 
in savings banks, and for that purpose to make a semi-annual resturn. 
They are also required to make an annual return, in April, of personal 
property held in trust, and to pay taxes on same. They may invest trust 
funds in the same ways as individuals acting in similar fiduciary capaci- 
ties are authorized to invest. Banks and trust companies are not liable 
for payment of raised or forged checks unless notified within one year 
after such checks are returned to the depositor. The Bank Commission- 
er may cause a special appraisal to be made of real estate upon which 
he thinks an excessive loan has been made or is about to be made. 

No trust company may be merged with another trust company ex- 
cept under the provisions of sections 40-44? of chapter 437 of the Acts 
of 1903, or without consent of three-fourths of all the stock. Offices of 
trust companies thus taken over may be operated as branches if the 
Bank Commissioner gives permission. After January 1, 1918, no trust 
company may hold more than ten per cent, of the capital stock of an- 
other trust company. 

Trust companies may become members of the Federal Reserve Bank, 
and be subject to its provisions as to reserve, discounts, acceptances, etc. 
A trust company with a capital of $1,000,000 or more may secure au- 
thority from the Bank Commissioner, at his discretion, to open branches 
in foreign countries. 

(Revised Laws, chapter 11 6, including amendments to 1902; Acts 
1902, chapter 355; Acts 1904, chapters 200, 374; Acts 1905, chapters 
189, 228, 331; Acts 1906, chapter 204; Acts 1907, chapters 319, 320, 
417, 487; Acts 1908, chapters 116, 520, 590; Acts 1909, chapters 342, 
490, 491; Acts 1910, chapter 377'; Acts 1911, chapters 87, 148, 337, 
383, 389; Acts 1912, chapters 53, 73, 90, 128, 171, 277; Acts 1913, 
chapters 206, 409; Acts 1914, chapters 422, 504, 537, 567, 610.) 

Michigan. 

Seven or more persons may incorporate to carry on a "trust, deposit 
and security business." Articles of association must be executed in 
triplicate and filed. The capital must be at least $300,000 in cities of 
100,000 inhabitants or more, and at least $150,000 in smaller places, and 
may not exceed $5,000,000; 50 per centum must be paid in at the start 
and the balance within six months. Before the company begins business, 
50 per centum of the capital, but not more than $200,000 in amount, in 



424 TRUST COMPANIES. 

securities, must be deposited with the State Treasurer. The number of 
directors must be seven or more, and each must own at least ten shares 
of stock. Before a dividend is declared, one-tenth of the net profits 
must be carried to surplus fund, until it equals 20 per centum of the 
capital. Powers specified, to hold real and personal property in trust; 
to execute trusts for married women and minors; to administer court 
trusts; to act as agents or attorneys for the transaction of business, the 
management of estates, the collection of income, principal, etc.; to act 
as fiscal agent, transfer agent and registrar; to act as executor, admin- 
istrator, trustee, receiver or assignee, guardian of any minor, incompetent 
person, lunatic, or any person subject to guardianship, courts being au- 
thorized to make such appointments; except in the discretion of the 
court, trust companies acting in these capacities need not be required to 
give security other than the deposit with the State Treasurer; to loan 
upon real and collateral security; to issue its notes and debentures pay- 
able at a future date; but nothing herein contained shall be construed as 
giving the right to buy and sell bank exchange, or do a general banking 
business; to do a safe-deposit business; to become sureties in cases where, 
by law or otherwise, one or more sureties are required, except as surety 
on any recognizance for criminals ; to do a title insurance business. Such 
companies may hold real estate needed for the transaction of business, 
including with the business office, other apartments in the same build- 
ing to rent as a source of income, and such as is acquired in the settle- 
ment of debts ; but the latter shall not be reckoned as an asset for longer 
than five years. They may hold real estate in trust. They must keep 
a reserve of 20 per centum of "matured obligations and money due and 
payable." Of this three-fourths may be kept in any bank or trust com- 
pany approved by the Commissioner of the Banking Department. The 
securities to be deposited with the State Treasurer shall consist of bonds 
secured by mortgages, or notes and mortgages on unincumbered real 
estate in Michigan, worth double the amount secured thereby, or public 
stocks and bonds of the United States, of Michigan, or of any State of 
the United States that has not defaulted on principle or interest for ten 
years, or in duly authorized issues of counties, townships, school districts 
and municipalities in such States. The directors may invest the balance 
of the capital, and moneys received in trust, in the same securities, " or 
in such real or personal securities as they may deem proper." The 
stockholders are subject to double liability. Reports must be rendered 
quarterly or oftener, at the call of the Commissioner of the Banking 
Department. Such reports must be published in a newspaper. Reports 
must be made within ten days after each dividend, giving amount of 
dividend, amount carried to surplus, and net earnings in excess thereof. 
Such corporations are under the supervision of the Commissioner, and 
must be examined by him annually and when requested by the directors. 
If an unsafe condition is revealed, the Commissioner and the Attorney- 
General institute proceedings for the appointment of a receiver. The 



STATE AND TERRITORIAL LAWS. 425 

records of the stockholders must be open to inspection by directors, offi- 
cers, stockholders and creditors of the company. Minors may control 
their deposits. A deposit made by one person in trust for another, the 
company having no further notice of the existence of a valid trust, may 
be paid to the person for whom the deposit was made. Joint deposits 
may be paid to either, whether the other be living or not. Chapter 240, 
Acts of 1907, provides for "safety and collateral deposit companies," 
having power to do a safe deposit business and certain limited trust busi- 
ness. 

(Howell's Annotated Statutes 1913, Chapter 104, sections 6476-6510; 
Acts 1897, No. 106; Acts 1907, No. 240; Acts 1909, No. 248; Acts 
1913. No. 17.) 

Minnesota. 

Three or more persons may incorporate "annuity, safe deposit and 
trust companies." The name adopted must be such as to be not readily 
confounded with that of an existing corporation; and corporations not 
organized under the trust company laws are forbidden to advertise a trust 
business. Capital required, in cities of less than 25,000 inhabitants, $50,- 
000; in cities of from 25,000 to 100,000 inhabitants, $75,000; in cities 
of from 100,000 to 200,000 inhabitants, $100,000; in larger cities, 
$200,000. The capital may not exceed $2,000,000. If the capital is 
less than $200,000, fifty per cent, of same must be invested in securities 
to be deposited with the Superintendent of Banks; if more than $200,- 
000 twenty-five per cent, must be so invested. The securities 
in which this deposit may be invested are bonds of the United States or 
of any State therein, bonds of the cities of St. Paul, Minneapolis or 
Duluth, and in certain other municipal bonds, county, school district and 
railroad bonds described in the statute. These securities are held by the 
Superintendent of Banks as a guaranty fund for depositors and credit- 
ors and for the faithful discharge of duty. Other like securities may 
be substituted from time to time. The income of same goes to the cor- 
poration making the deposit. The number of directors of such a cor- 
poration may be from nine to twenty-seven; a majority of them must be 
citizens of the State, and each must own at least ten shares of stock. 
Each director serves three years, one-third of them retiring each year. 
Directors are required to take an oath of office. 

The powers specified for such corporations are the ordinary powers 
of corporations, and in addition, to hold real estate necessary for the 
convenient transaction of its business, and such as is acquired by fore- 
closure, etc. ; but no investments may be made in real estate, either of the 
funds of the company or of trust funds, unless by virtue of a particular 
contract with the maker of a trust; to loan on mortgage security; "to 
purchase notes, bonds, mortgages and other evidences of indebtedness and 
other securities"; to hold real or personal property in trust; to receive 
trusts from courts, from public or private corporations or from persons; 

28 



426 TRUST COMPANIES. 

to execute trusts for married women with respect to their separate 
estates; to act as fiscal and transfer agent and registrar; to act as 
depository for court funds, for officers and for persons acting in trust 
capacities; to act as trustee, assignee, receiver, executor, administrator, 
guardian of the person or estate of minors, guardian of the estate of any 
lunatic, imbecile, spendthrift, habitual drunkard or other person unable 
to manage his estate; the courts are authorized to make such appoint- 
ments, and no bond or other security need be required of the corpora- 
tion; to act as general agent and attorney in fact for the management 
of estates, "and generally to act for and represent corporations or per- 
sons under powers and letters of attorney in all respects as a natural 
person could do"; and to become sole surety upon any bond or under- 
taking in suits or special proceedings in courts. Persons holding fidu- 
ciary appointments may resign in favor of a trust company. Trust 
funds of $100 or over must be invested within a year in the same kinds 
of securities as those specified for the deposit with the Superintendent of 
Banks, and such securities must be allowed by the probate court in settle- 
ments. Trust funds and accounts must be kept separate from other 
funds and accounts of the corporation; securities purchased with trust 
funds must be endorsed to the company as trustee, etc. Orders of courts 
or agreements regarding the investment of trust funds must be followed. 
"No such corporation shall engage in any banking, mercantile, manufac- 
turing or other business, except such as is hereby expressly authorized." 
No loans shall be made to directors, officers or employees, nor shall they 
be allowed to become indebted to the corporation in any way; and viola- 
tion of this is made the crime of embezzlement. Such companies are at 
all times subject to further orders from the courts appointing them to 
trusts, and must render statements to such courts when called for. They 
are subject also to the general jurisdiction of the district court of their 
county. They must render statements annually in June to the Public 
Examiner, and have same published in a newspaper, with a list of stock- 
holders, and give additional information when called for by the Ex- 
aminer. The Public Examiner must examine every such company twice 
each year or oftener. If he finds an unsafe condition, he may take 
charge at once of all the affairs and property of the company, and apply 
to the proper court for a receiver. Such companies are forbidden to 
make an assignment, but must notify the Examiner instead. Unauthor- 
ized concerns may not use the word "trust" in titles. 

(General Statutes 1913 sections 4624-4635 and 6405-6424; Laws of 
1905, Chapter 49; Laws of 1907, Chapter 225; Laws of 1909, Chapters 
103, 178, 201, 431, 495; Laws of 1911, Chapters 160, 305, 272, 314; 
Laws of 1913, Chapter 529.) 

Mississippi. 

Three or more persons may incorporate to do business as a commer- 
cial bank, a savings bank, or a trust company, or as a combination 



STATE AND TERRITORIAL LAAVS. 427 

thereof. Any bank heretofore or hereafter incorporated and having a 
capital stock of at least $25,000, may include in its charter the right 
to do a trust company business. Trust companies are governed by the 
same laws as other banking institutions, "and their acts shall be subject 
to the same restrictions and supervision by the courts as the acts of a 
person acting in such fiduciary capacity." Powers specified, in 
addition to ordinary banking, to receive and execute trusts of 
every description received from persons, corporations or by order 
of courts; to hold in trust real or personal property under any legal 
trusts ; to execute or guarantee bonds required by law ; to act as agent for 
the investment of money or the management of property; to act as trans- 
fer agent, registrar, trustee under bond issues; to act as guardian, admin- 
istrator, executor; to do a fidelity insurance business; to act as agent or 
attorney in fact for the sale of real or personal property; to accept trust 
funds or other property upon specially agreed terms, but may not charge, 
receive or pay more than legal interest; to loan upon real or collateral 
security; to act as assignee or receiver; to act "in any other fiduciary 
capacity authorized by law." 

"Trust companies may establish a special mutual loan department in 
which the expenses, losses and profits shall be kept separate from all 
other departments." Separate stockholders may be received for such 
department, who may borrow from the company and fix and regulate 
the manner of conducting this department. "Shares of stock may be 
issued to such borrowers, to be paid for in such installments as may be 
agreed upon or fixed by the by-laws." Details of this department are 
further outlined. (Section 265.) 

Companies having on deposit money or other effects belonging to a 
deceased depositor must, within thirty days after the qualification of 
the executor or administrator of said deceased depositor, mail to the 
executor or administrator a statement of the amount of such deposit. 
The creation of branch banks or offices is forbidden after October, 1906; 
and companies then operating branches are required to set apart and 
maintain $10,000 as a capital for each branch. 

The term "banks" is defined to include trust companies, and all 
banks are subject to the supervision of the Board of Bank Examiners. 
They are required to examine any bank on request of the board of di- 
rectors, and are empowered to call upon each bank for reports as of 
specified past days, which reports must be published in local newspa- 
pers. Banks must have at least three directors, each of whom must 
own $200 par value of stock. They must meet every three months and 
examine the bank. 

The use of the words "bank," "trust company," etc., is forbidden 
except by corporations complying with the act (Chapter 124, 1913) es- 
tablishing the Banking Department. 

Banks may hold real estate needed for the transaction of business, 
and such as is acquired in the satisfaction of debts; the former may 



428 TRUST COMPANIES. 

not exceed thirty per cent, of the paid capital, surplus and profits, ex- 
cept in cities of over 6,000 inhabitants, in which the amount may not 
exceed fifty per cent. Before the declaration of dividends, one-tenth 
of net profits must be carried to surplus until it equals twenty per 
cent, of the capital. 

Minors may control their deposits. Joint deposits may be paid to 
either, whether the other be living or not. Deposits of less than $300 
of deceased persons may be paid to the nearest relative without admin- 
istration. Loans to one person or interest may not exceed twenty-five 
per cent, of capital and surplus, bona fide discounts, time loans on ware- 
house receipts or bills of lading and loans on collateral not exceeding 
ninety per cent, of the value thereof excepted. Checks must not be cer- 
tified unless funds to cover are on deposit. Owners, officers or em- 
ployees may not borrow from the bank except with permission of the 
directors. Stockholders are subject to double liability. 

The reserve required, "in actual cash or balances due from good sol- 
vent banks," is fifteen per cent, of demand and seven per cent, of time 
and savings deposits, except in cities of over 50,000 inhabitants, where 
the percentages are twenty-five per cent, and ten per cent, respectively. 

Interlocking bank directorates and voting trusts of bank stocks are 
forbidden. No bank except regional reserve banks may own stock of 
other banks. Clearing-house associations must be incorporated. Any 
bank may participate in the bank depositors guarantee fund, but must 
first submit to examination. 

(Code 1906, Chapter 14, sections 256-267; Laws 1908, H. B. 110, 
179, 417; Laws 1914, Chapters 124, 125.) 

. Missouri. 

Trust companies may be incorporated by five or more persons. Arti- 
cles of agreement must be filed. 

Powers specified, to receive money in trust; minors may control their 
own accounts; to do a safe deposit business: to execute trusts of every 
description for persons and corporations; to execute trusts received from 
courts; to act as assignee, receiver, trustee and depositary; to execute 
bonds required in court proceedings ; to hold real or personal property in 
trust; to act as agent and attorney in fact for persons and corporations 
in the management of property and for the investment of money; to act 
as transfer agent and registrar; to execute trusts for married women in 
respect to their separate property, and to act as agent for the manage- 
ment of such property, "and generally to have and exercise such powers 
as are usually had and exercised by trust companies"; to act as executor, 
administrator, guardian or curator of any infant, insane person, idiot or 
habitual drunkard, or trustee for any convict in the penitentiary, under 
the appointment of any court of record having jurisdiction; to do a 
fidelitv insurance business; to do a title insurance business; to loan 



STATE AND TERRITORIAL LAWS. 129 

money upon real estate or collateral security, and to execute and issue 
its notes and debentures payable at a future time, and to pledge its 
mortgages on real estate and other securities as security therefor, but 
such notes and debentures may not exceed in the aggregate ten times the 
paid-up capital, and may not exceed the amount of first mortgages 
pledged to secure their payment, to buy and sell all kinds of Govern- 
ment, State, municipal and other bonds, and all kiuds of negotiable and 
non-negotiable paper, stocks and other investment securities. Trust com- 
panies must maintain a reserve of 15 per centum of demand deposits, 
on hand or on deposit. Deposits on which the company has the right to 
demand twenty days' notice are not to be considered demand deposits. 

Before a dividend is declared, one-tenth of the earnings must be car- 
ried to surplus until the latter equals 20 per centum of the capital. 

The amount of capital shall be not less than $100,000, and not 
more than $10,000,000. 

The number of directors shall be not less than five nor more than 
twenty-five; all of them must be stockholders, and a majority of them 
must be bona fide citizens of the State. If the number of directors ex- 
ceeds five, they shall be divided into three classes, so that one-third of the 
number shall retire each year, the term of each member being three years. 
They may invest moneys placed in their charge in loans secured by real 
estate or other sufficient collateral security, in public bonds of the United 
States or of this State, or in the bonds or stocks of any incorporated 
city or county in this State. The directors must meet at least once a 
month. Their written records must show the aggregate indebtedness of 
each director, and no one of them may borrow in excess of 10 per centum 
of the capital and surplus without consent of a majority of the others. 

Loans may not be made on the company's own stock, except to pre- 
vent loss on debts previously contracted in good faith, in which case the 
stock must be sold within six months. A trust company may own only 
such real estate as is required for the transaction of its business, and 
such as is acquired in satisfaction of debts due it. 

Upon making with the Superintendent of the Insurance Department 
a deposit of $200,000, consisting of cash, Treasury notes of the United 
States, or Government, State, county, municipal or other bonds, or bonds, 
notes or debentures secured by first mortgages, or deeds of trust or mort- 
gages, or deeds of trust on unencumbered real estate in the State of 
Missouri, worth at least double the amount loaned thereon, or such other 
first-class securities as the said Superintendent may approve, and upon 
satisfying said Superintendent of its solvency, any corporation organized 
under this act shall be permitted to qualify as guardian, curator, exec- 
utor, administrator, assignee, receiver, trustee by appointment of court 
or under will, or depositary of money in court, without giving bond as 
such, and also to become sole guarantor or surety upon bonds and to do 
fidelity insurance business. Such deposit shall be primarily liable for 
obligations of the company due to its acting in the capacities named. In 



430 TRUST COMPANIES. 

cities of 350,000 inhabitants or more, trust companies may act as city 
depositories. 

Trust companies are under the jurisdiction of the State Banking 
Department, who must examine each company at least once a year and 
oftener if it seems expedient. Reports to the Department must be made 
at least once a year. The stockholders are also required to appoint a 
committee of three or more of their number to make an annual examina- 
tion. 

(Revised Statutes 1909, Chapter 12, especially Article 3, sections 
1121-1141; Acts of 1909, p. 321, S. B. 321; Acts of 1911, p. 
91, S. B. 102; Acts of 1913, p. Ill, H. B. 609.) 

Montana. 

Three or more persons may incorporate to carry on a "trust deposit, 
security and loaning business." Articles of agreement must be filed with 
the Secretary of State, and a copy with the county recorder of deeds. 
The term of existence of the corporation may not exceed fifty years. 
The capital must be not less than $100,000 nor more than $10,000,000. 
The number of directors must be not less than three nor more than 
twenty-five; all must be stockholders, and a majority must be bona fide 
citizens of the State. If their number exceeds five, the term of office of 
each shall be three years, and one-third shall retire each year. 

Powers specified, to receive moneys in trust; to accept and execute 
trusts of every description committed to them by persons, corporations 
or by order of courts; to hold any real or personal estate in trust; to 
execute or guarantee any bonds required to be given in proceedings in 
law or equity; to act as agents for the investment of money; to act as 
transfer agent or registrar: to execute trusts for married women in re- 
spect to their separate property, and to manage same, "and generally to 
have and exercise such powers as are usually had and exercised by trust 
companies"; to act as trustee, assignee, receiver, administrator, executor, 
guardian of the person and estate of any minor, or of the estate of any 
lunatic, imbecile, spendthrift, habitual drunkard or other persons unable 
to manage their estates ; to do a fidelity insurance business ; to do a title 
insurance business; to loan money upon real or personal security; to 
issue its notes or debentures payable at a future time, and to pledge its 
mortgages upon real estate or other securities as security therefor; to 
buy and sell Government, State, county, municipal and other bonds, and 
all kinds of negotiable, non-negotiable and commercial paper, stocks and 
other investment securities ; to become endorser and surety ; to receive 
both time and demand deposits ; to do a safe deposit business. 

The directors are authorized to invest the capital "in good securi- 
ties" ; and the capital and funds entrusted to the company may be in- 
vested in notes or bonds and mortgages on unincumbered real estate in 
the State, or in stocks and bonds of this State or any State or Territory 



STATE AND TERRITORIAL LAWS. 431 

of the United States, or in the bonds of any county } city, town or school 
district of this State. Such corporation may own only such real estate 
as is required for the transaction of its business and such as is acquired 
in the settlement of debts due it. 

Loans to any managing officer are forbidden except upon good col- 
lateral or other good and specific security; and where such a loan ex- 
ceeds 1 per centum of the capital it must first be approved by a maj ority 
of the Board of Directors and be entered with their signatures upon the 
minutes. Loans to any one party, — bona fide discounts excepted, — must 
not exceed 20 per centum of the capital and surplus. Stockholders art 
subject to double liability. The reserve required is fifteen per centum of 
the total deposits, "of which such portion as the Board of Directors may 
determine" may be on deposit in banks in cities of the first and second 
classes approved by the State Examiner as reserve banks. The reserve 
banks are required to maintain a reserve of 25 per centum, which 
may be in lawful money or on deposit with banks subject to the approval 
of the State Examiner. The use of the terms "trust" and "trust com- 
pany" in titles is forbidden except to regularly organized trust com- 
panies. Deposits made by one person in trust for another, the com- 
pany having no other notice of the existence of a valid trust, may be 
paid to the person for whom the deposit was made. Joint deposits may 
be paid to either, whether the other be living or not. Before a divi- 
dend is declared, one-tenth of net earnings must be carried to surplus 
until it equals twenty per cent, of the capital. No bank is liable to a 
depositor for payment of a forged or raised check unless notified within 
one year. Foreign companies may operate in the State under conditions 
detailed in the statutes. The Laws of 1905, page 216, provide for the 
organization of "Endowment and Investment Corporations", which have 
some of the powers of banks and of trust companies. 

The State Examiner is required to call for not less than four reports 
each year from trust companies, at intervals of not less than two calendar 
months; the reports to be according to a form prescribed by him and to 
be published in local papers. The directors are authorized to declare 
semi-annual dividends; and reports of dividends must be forwarded to 
the State Examiner within ten days after same are declared. The direc- 
tors are personally liable for violations of the law. 

(Code 1895, paragraphs 590-611. Act of March 15, 1901. Laws of 
1905, Chapter 19. Laws of 1907, Chapters 137, 159, 164, 190. Laws 
of 1909, Chapters 37, 78, 110, 112.) 

Nebraska. 

Prior to 1911 this State had practically no legislation relating di- 
rectly to trust companies, but in that year a general trust company act 
was passed, under which three or more persons may incorporate such a 
company. It must be controlled by a board of not less than five di- 



432 TRUST COMPANIES. 

rectors. Capital required, in cities or towns having not over 10,000 
inhabitants, $25,000; in cities of from 10,000 to 50,000 inhabitants, 
$50,000; in cities of from 50,000 to 100,000 inhabitants, $100,000; in 
larger cities, $200,000. Powers specified :. To receive trust funds for 
investment or in trust; to do a safe deposit business; to accept and ex- 
ecute all trusts and perform all duties of every description committed 
to them by any corporation, person or persons, or by order, judgment 
or decree of a court of record; to act as assignee, receiver, trustee and 
depository; to hold real or personal property by order of such court or 
entrusted to it by any person or corporation, and to execute any legal 
and lawful trust in regard to same; to act as agent or attorney in fact 
for persons or corporations in the management and control of real or 
personal property; to execute trusts for married women in respect to 
their separate property; to act either by itself or jointly with natural 
persons as administrator, executor, guardian, curator or conservator of 
the property of any infant,- insane person, etc., or as trustee of the 
estate of a deceased person under appointment of court; the courts are 
authorized to make such appointments; to loan money on real estate at 
not over forty per cent, of the appraised value thereof; to loan money 
upon collateral security, but only upon such property as is a legal in- 
vestment for the compan}'' under this act, but no loans may be made to 
officers or directors of the company; to buy, own, hold and sell Govern- 
ment, State, county and municipal bonds, and stocks, warrants, bills of 
exchange, notes, mortgages and other investment securities, negotiable 
and non-negotiable, but it may not buy bonds of any corporation (other 
than municipal) the interest on which has been in default for two years 
next preceding the date of purchase, nor the stock of any corporation 
except such as have earned annual dividends of at least four per cent, 
for the three years just preceding date of purchase, and no trust com- 
pany shall buy, own or accept as collateral the stock of any corpora- 
tion organized under this act; to purchase and own real estate needed 
for the conduct of the business at a cost not to exceed forty per cent, 
of the paid capital, and real estate acquired to secure debts. Trust 
companies may do and perform all acts and exercise all powers neces- 
sary for the full and complete exercise of the powers above granted, 
"with the full powers of a natural person when acting under similar cir- 
cumstances" ; but "none of the powers hereby granted shall extend to or 
become construed to authorize any such corporation to conduct the busi- 
ness of banking, as defined in section 3 of chapter 8 of the Compiled 
Statutes of Nebraska for 1909, except as in this act provided." 

Trust companies are required to deposit with the Auditor of Public 
Accounts securities consisting of Government, State, municipal or other 
bonds, first mortgages on improved real estate in Nebraska, or such 
other securities which are a legal investment for the said corporation as 
the Auditor of Public Accounts may approve; same to be held as pri- 
marily liable for the obligations of the company as fiduciary. The 



STATE AND TERRITORIAL LAWS. 433 

amounts of such deposit are, for companies having $25,000 capital, 
$10,000; companies having from $50,000 to $100,000 capital, $15,000; 
companies having from $100,000 to $150,000 capital, $25,000; compa- 
nies having $200,000 capital, $40,000. 

"The maximum liability which may be incurred by any corporation 
organized under this act. exclusive of money or properties held in trust, 
shall not exceed two-thirds of the paid-up capital stock." 

Trust companies must file with the Auditor of Public Accounts in 
July each year, statements of condition on "the 30th day of June next 
preceding," in the manner and form required by the Auditor, and must 
publish such statements in local newspaper. The use of the words 
"trust." "trust company" or "trust association" in titles is forbidden ex- 
cept to corporations complying with this act. 

(Laws of 1911, Senate File 171.) 

Nevada. 

Under the Banking Law of 1911, three or more persons may incor- 
porate a banking corporation with power to carry on a trust company 
business, either exclusively or in connection with the banking business. 
The capital must be not less than $25,000. There must be at least three 
directors, and each must hold at least $1,000 par of stock. As a bank 
it has ordinary banking powers, including the right to loan on real es- 
tate. It may invest not to exceed one-third of its capital and surplus 
in a bank building. As a trust company it has additional powers to act 
as trustee under mortgage and bond issues, to accept and execute any 
municipal or corporate or individual trust not inconsistent with the laws 
of this State, to act under appointment of court as guardian, adminis- 
trator, receiver or trustee, to act as executor or trustee under any will, 
and when acting in above fiduciary capacities may be relieved by the 
court from giving any security bond, to act as fiscal agent, transfer 
agent or registrar, to act as local or resident agent of foreign corpora- 
tions and as agent for insurance companies. 

If specified in its articles of incorporation it may do a savings bank 
business. The funds of a savings bank may be invested only in Gov- 
ernment, State or municipal bonds or notes secured by same, mortgages 
on real estate at not exceeding fifty per cent, of the value thereof, 
notes secured by collateral security of known marketable value, or it may 
be deposited in good solvent banks or held as cash. It may not invest 
in or loan upon chattel mortgages. 

No bank may maintain branches. A majority of the directors must 
reside in the county or adjoining counties. They must hold at least four 
regular meetings each year, at each of which a thorough examination of 
the books, records, funds and securities must be made and recorded. 
Stockholders are subject to double liability. Banks may not purchase or 
loan upon their own stocks, unless to prevent loss on debts previously 
contracted, and shall not invest "in the stock of anv other bank or trust 



434 TRUST COMPANIES. 

company or corporation." They must maintain a reserve of fifteen per 
cent, of the entire deposits, of which one-third must be in actual cash, 
and the balance may be on deposit with banks approved by the Bank 
Examiner; but banks which act as depositary for other banks must main- 
tain a reserve of twenty-five per cent., divided as above. Banks doing a 
savings or trust company business and not a general banking business 
must maintain a reserve of ten per cent, of their deposits, of which one- 
half may be on deposit in good solvent banks. 

Loans to one person or interest may not exceed twenty-five per 
cent, of capital and surplus, bona fide discounts and collateral loans 
excepted. Directors, officers and employees are forbidden to endorse 
notes for others; they may borrow from the bank only on good security 
approved by the directors. Before the declaration of a dividend, one- 
tenth of net profits must be carried to surplus until it equals twenty per 
cent, of the capital. No bank shall pay interest on time deposits direct- 
ly or indirectly at a greater rate than four per cent, per annum. It is 
unlawful to certify checks unless the amount thereof is on deposit. Of- 
ficers permitting overdrafts are personally liable. Lists of stockholders 
and their holdings mast be kept open to the inspection of stockholders, 
creditors and tax officers. The circulation of false rumors regarding 
banks is a misdemeanor. 

All banks, including trust companies, are under the supervision of 
the Bank Examiner, to whom they must render not less than four re- 
ports each year, as of past days, and according to forms prescribed by 
him. The reports must be published in a local newspaper. He must 
examine each bank at least twice each year. 

(Laws of 1903, chapter 121; Statutes of 1907, chapter 119; Laws 
of 1911, chapter 150.) 

New Hampshire. 

Trust companies, as well as banks, are incorporated only by special 
acfc of the Legislature. The powers of such corporations are enumerated 
in their charters. There are a few general laws regulating the business 
of trust companies and the general banking laws apply to them. For 
purposes of taxation, they are required to report to the State Treasurer 
annually, on or before May J. The company must pay to the same of- 
ficial annually, in October, a tax of three-fourths of one per centum 
upon the amount of the savings deposits on which it pays interest, after 
deducting the value of its real estate and the value of its loans secured 
by mortgage on real estate in the State made at a rate not exceeding five 
per centum per annum and the amount invested in certain bonds ; and 
in addition a tax annually of one per centum upon the capital stock, less 
the value of all real estate owned by the corporation and not already 
deducted from the amount of the general deposits as hereinbefore pro- 
vided. Such taxes are in lieu of all other taxes against the corporation, 
their stockholders and their depositors on account of their interests 



STATE AND TERRITORIAL LAWS. 4,35 

therein. Trust companies are under the supervision of the Bank Com- 
missioners, who are required to examine them annually, or oftener when 
so directed by the Governor. If unsafe conditions are revealed, the 
Bank Commissioners may apply to the supreme court for the appoint- 
ment of an assignee to take charge of the institution. The savings pass- 
books must be verified every four years by a person selected by the Bank 
Commissioners. Trust companies are forbidden to make loans 
to officers or directors except by the unanimous approval of the 
board of directors in writing. If the company transacts the business of 
a Savings bank, such business must be conducted in a separate depart- 
ment, which is amenable to the laws governing Savings banks, and the 
Treasurer of the company shall give a bond to the savings department in 
like manner as is required of the treasurers of savings banks. Trust 
companies are forbidden to commence business until they have satisfied 
the Bank Commissioners that their capital has been paid in in accordance 
with the provisions of their charters. The management of such com- 
panies shall consist of a board of trustees or directors elected annually, 
who must be sworn to the faithful discharge of their duties, and one of 
whom shall be elected President of the company. Such board shall elect 
an investment committee of not less than three of its members. The 
board must meet at least once each month, and receive the report of the 
investment committee. Each director must be the absolute owner of at 
least ten shares of stock; or of at least five shares if the capital stock 
does not exceed $50,000. A trust company may not "hire" money or give 
its note except on the duly recorded vote of the directors. The directors 
are required to make a semi-annual examination of the conrpany, forward 
reports of such examinations to the Bank Commissioners, and publish 
copies of same in a local newspaper. For the record of loans and invest- 
ments, trust companies must keep a separate book, with classifications as 
required by the Bank Commissioners, which book must be submitted to 
the Commissioners or the directors at each examination. The Treasurer 
of the company must report to the Bank Commissioners the condition of 
the company annually as of the last business day of June, and the Com- 
missioners must examine each company annually. Officers and em- 
ployees are forbidden to receive any fee, present or benefit from bor- 
lowers as an inducement to make loans. Trust companies are forbidden 
to loan to one person, firm or corporation an amount in excess of ten 
per centum of their capital, or to hold, both by way of investment and 
security for loans, the stock and bonds of any corporation to an amount 
in excess of said ten per centum, or to make loans on their capital stock. 
The investments permitted for savings banks and the savings depart- 
ments of trust companies are detailed at great length in the statutes, 
and include first mortgages on real estate in the State at not over sev- 
enty per cent, of the value thereof, — in which not over seventy per cent, 
of the deposits may be invested, first mortgages on improved real estate 
located elsewhere, collateral notes, notes with two or more signatures, 



436 TRUST COMPANIES. 

United States, State and municipal bonds, railroad and public utility 
bonds, bank and trust company stocks, real estate for the accommoda- 
tion of the business not to cost over ten per cent, of the deposits ; vari- 
ous restrictions regarding each class of investments being specified. 

Minors and married women may control their deposits. Insurance 
business of all kinds is prohibited, as is also the guarantee business and 
the issue and sale of the company's own bonds or mortgage securities. 
Stockholders are subject to double liability (applicable to companies or- 
ganized on or after January 1, 1911). A savings bank is forbidden to 
pay dividends of more than three and a half per cent, per annum unless 
it has a guarantee fund of at least five per cent, of its deposits and its 
assets are valued by the Bank Commissioners at five per cent, more 
than the deposits. Joint deposits are payable to either, whether the 
other be living or not. The treasurer of a trust company — or other 
bank — is forbidden to retain in his custody for more than ten days at a 
time, the savings pass-book of a depositor, except when held as collateral 
security. 

(Laws of 1895, chapters 90, 92, 105 and 108; Laws of 1899, chap- 
ter 14; Laws of 1901, chapter 165; Public Statutes, chapter 65, §12, and 
chapters 162, 163 and 165, passim.; Laws of 1905, chapters 26, 32, 45, 
55, 56, 68, 75, 81, 105; Laws of 1907, chapters 29, 67, 102, 112, 123; 
Laws of 1909, chapters 62, 92, 103, 125; Laws of 1911, chapters 68, 
120, 194.) 

New Jersey. 

The laws of this State regarding trust companies were carefully re- 
vised in 1899, and the Trust Company Law of that year is quite elabo- 
rate. Seven or more persons "of full age" may incorporate a trust com- 
pany. The name of the company must contain the word "trust", and no 
company incorporated under any other act may use such word in its title. 
The capital must be at least $100,000 fully paid, divided into shares of 
$100 each. More than one class of stock is forbidden. The proceedings 
for incorporation are specified in detail. 

In addition to the usual corporate powers, such a company, "whether 
such powers are set forth in its charter or certificate of incorporation 
or not," shall have power: To act as fiscal or transfer agent, and in 
such capacity to receive and disburse money; to act as registrar; to act as 
agent for corporations, foreign or domestic; to receive deposits of trust 
moneys, securities and other personal property ; to loan on real or personal 
security; to hold such real estate as is necessary or convenient for the 
transaction of its business, or as its purposes may require, and such as is 
acquired in the settlement of debts due to it; to act as trustee under a 
mortgage or bond issue, "and to accept and execute any other municipal 
or corporate trust not inconsistent with the laws of this State;" to exe- 
cute trusts for married women in respect to their separate property and 
to be their agent in the management of same; to act under appointment 
of court as guardian, receiver or trustee of the estate of any minor, and 



STATE AND TERRITORIAL LAWS. 437 

as depository of any moneys paid into court; to receive and execute court 
trusts; to manage estates; to receive and execute trusts of any nature or 
description confided to it by persons, bodies politic., corporations or other 
authority, and to hold any property or estate, real or personal, that may 
be the subject of any such trust; "to purchase, invest in and sell stocks, 
promissory notes, bills of exchange, bonds and mortgages and other se- 
curities", but "no corporation created under this act shall have power to 
discount commercial paper"; to give its bonds or obligations for moneys 
or securities for moneys borrowed or received on deposit or for invest- 
ment; to act as assignee or trustee under an assignment; to act as re- 
ceiver or trustee; to act as executor, administrator or as committee of the 
estates of lunatics, idiots, persons of unsound mind and habitual drunk- 
ards; to do a safe deposit business, a title insurance business, a fidelity 
insurance business, and to become sole surety in cases where by law two 
or more sureties are required, provided such powers are enumerated in 
the certificate of incorporation; to collect coupons or interest on securi- 
ties; to receive and manage any sinking fund; "generally to execute 
trusts of every description not inconsistent with the laws of this State 
or of the United States"; to receive money on deposit subject to check 
or otherwise. 

Trust companies are forbidden to make loans upon bills, notes or 
other evidences of debt, except to a county, city, town, township, 
borough or municipality of this State, unless the same shall be secured 
by mortgage upon lands or by other securities, the actual market value of 
which other securities shall at all times exceed by at least ten per 
centum the amount loaned upon the same. Funds or property held in 
trust must not be mingled with the other funds or property of the com 
pany. Such a company may not be appointed to act as assignee, receiver, 
administrator, guardian or trustee by any surrogate or court of the 
State, until it has set apart a fund specially devoted to securing its liabili- 
ties in such capacities of trust and confidence, invested in securities of 
the character in which trust funds may by law be invested, and has de- 
posited such securities with the register of the prerogative court. This 
fund must be equal to at least one-fifth the amount of the liabilities for 
which the fund is especially responsible, unless the fund equals or ex- 
ceeds $100,000 — in which case it must be equal to at least one-tenth of 
such liabilities. However, the creation of this fund is not required when 
the trust company gives security in the manner prescribed by law in such 
behalf for natural persons, or in cases where the trust company shall 
have been appointed as executor or trustee by any will or deed. If the 
deposit be made, no other security shall be required. 

A list of stockholders of record must be kept which must be open at 
all times during business hours to the inspection of any stockholder. The 
affairs of every trust company shall be managed by a board of not less 
than five directors, elected annually. A majority of the Board consti- 
tutes a quorum; provided that if the number of directors exceeds nine, 



438 TRUST COMPANIES. 

they may designate nine members, of whom any five shall constitute a 
quorum. Each director must own at least five shares of stock, and is 
required to subscribe to and place on file an oath not to knowingly vio- 
late, or permit to be violated, the provisions of the trust company law. 
Before the directors may declare a dividend, one-tenth of the net profits 
must be carried to a surplus fund until such fund equals twenty per 
centum of the capital. The directors must appoint examining commit- 
tees who must examine the affairs of the company every six months. No 
loans may be made to directors, officers or employees unless the proposi- 
tion to make such loan shall have been submitted in writing to the direc- 
tors or executive committee and regularly approved by a majority of 
those present constituting a quorum, nor shall such persons be permitted 
to become indebted to the company through an overdraft. At least two 
reports each year must be made to the Commissioner of Banking and 
Insurance, according to a form prescribed by him, and abstracts of such 
reports must be published once in a local newspaper. The Commissioner 
may call for special reports. No trust company shall make loans on its 
own stock; or be a purchaser of same unless such purchase be neces- 
sary to prevent loss on a previously contracted debt; and stock so pur- 
chased must be disposed of within one year. Deposits made by minors 
are under their control. Trust companies may not establish branches 
without written approval of the Commissioner of Banking and Insurance, 
and then only in the county and when the paid capital stock exceeds 
that required by law, by $100,000 for each branch office. 

Every trust company receiving deposits of money subject to check or 
payable on demand shall keep a reserve fund of fifteen per centum of all 
its immediate demand liabilities. One-fifth of this must consist of cash 
on hand; the balance may consist of deposits in "good, solvent banks or 
trust companies." Trust companies are subject to the inspection and 
supervision of the Commissioner of Banking and Insurance, who must 
examine them when he deems it expedient or at their request. If unsafe 
conditions are revealed, he may take immediate possession, notifying the 
Attorney-General, who shall institute such proceedings as are necessary. 
The capital of a trust company must be taxed in the taxing district where 
its office is situated, and its real estate where such real estate is situated. 
Trust companies are specially authorized to act as depositaries for the 
moneys of counties, cities and other municipalities. Trust companies 
may pay to either person moneys on a joint account, whether the other 
be living or not. It is a misdemeanor to circulate false reports regard- 
ing a bank or trust company. Foreign trust companies may do only such 
business as is permitted to domestic trust companies, and upon compliance 
with the laws. 

(Laws of 1899, chapter 174; Laws of 1902, chapter 71 ; Laws of 1903, 
chapters 210 and 214; Laws of 1906, chapters 157 and 191; Laws of 
1907, chapters 35, 40 and 50; Laws of 1910, chapters 44 and 53; Laws 
of 1913, chapters 140, 171, 132.) 



STATE AND TERRITORIAL LAWS. ±39 

New Mexico. 

Fifteen or more persons, a majority of whom are residents of the 
State, may incorporate a trust company. Articles of agreement must 
be filed with the State Auditor of Public Accounts and with the 
probate clerk of the county. The capital stock actually subscribed must 
be at least $100,000, of which at least $100,000 must be paid in lawful 
money of the United States ; except in towns of less than 7,000 popula- 
tion, in which the capital must be $100,000 with $50,000 paid in. The 
number of years that the corporation is to continue may not exceed fifty. 

Powers specified: To receive money in trust; to guarantee special 
deposits ; to do a safe deposit business ; to accept and execute all such 
trusts and perform such duties of every description as may be com- 
mitted to them by courts : to hold in trust real or personal property from 
whatever source received, and to execute any lawful trusts regarding 
same; to act as principal or surety and to guarantee against loss any 
principal or surety on any bonds required by law; to act as agent or at- 
torney-in-fact for persons or corporations in the management of real or 
personal property and for the investment of money; to act as transfer 
agent and registrar; to execute trusts for married women with respect 
to their separate property, real or personal, and to act as agent in the 
management of same; to act as executor, administrator or as guardian 
of the estate or curator of any infant, insane person, idiot or habitual 
drunkard or convict; to do a fidelity insurance business; to guarantee 
the principal or interest, or both, of any securities of any kind; to con- 
duct a title insurance business; to loan money on real estate and col- 
lateral security; to purchase, invest in and sell all kinds of Government, 
State, municipal and other bonds, and all kinds of negotiable and non- 
negotiable paper, and other investment securities. Courts are authorized 
to appoint trust companies as administrators, guardians, trustees, re- 
ceivers, assignees, or in other fiduciary capacities, and as legal deposi- 
tories for funds in the keeping of persons holding fiduciary appoint- 
ments. Such court or officer may make orders regarding such trusts, and 
require such accounts as could be required of a natural person 
acting in such capacity. Any trust company may qualify as executor, 
administrator, guardian, receiver, trustee, assignee, committee or in any 
other fiduciary capacity or as depository of money in court, may be- 
come sole guarantor, surety upon bonds, and so on, without giving bond, 
upon making with the Auditor of the State a deposit of not less 
than $50,000 nor more than $200,000, as the Auditor may from time to 
time require, in cash, Treasury notes of the United States, or Government, 
or State bonds, or bonds of any county of this State which has not de- 
faulted in the payment of its obligations for five years. Such deposit 
shall be primarily liable for the obligations of such corporation 
acting in fiduciary capacities, and shall not be liable for any other 
debt or obligation of the corporation until all such trust liabilities shall 



440 TRUST COMPANIES. 

have been discharged. But such corporations may act in such fiduciary- 
capacities without having made such deposit, upon the execution and ap- 
proval of a bond as required by law in the case of individuals. The se- 
curities deposited with the Auditor must be by him turned over to the 
Treasurer of the State, who shall have custody of same. 

No dividends may be declared by trust companies until at least $100,- 
000 of the capital stock has been paid in. Before dividends are declared, 
one-tenth of the net earnings must be carried to a surplus fund until 
such surplus fund equals twenty per centum of the paid-in capital stock. 

Such corporations may not make loans on their own stock; nor shall 
they purchase their own stock, except to prevent loss upon a debt pre- 
viously contracted, in which case such stock must be disposed of within 
six months. Loans to any one person may not exceed twenty per centum 
of the paid capital, and loans to any director, officer or employee must 
not exceed ten per centum of the paid capital. Such corporations must 
maintain a reserve of 15 per centum of their liabilities other than the 
liabilities for which bonds in an amount not less than $50,000 have been 
deposited with the Auditor of the State. Three-fifths of the reserve may 
consist of balances due the corporation from any National or State 
banks or from any trust companies designated by the Auditor. 

Trust companies are required to make to the Auditor of the State 
semi-annual reports in January and July, which reports must be pub- 
lished in a local newspaper. The Auditor must examine each company 
annually. If unsafe conditions are found, he may take charge of the 
company, and notify the Governor, who shall require the Solicitor-Gen- 
eral to institute proceedings for the appointment of a receiver. Trust 
companies may become depositories of State moneys to an amount not ex- 
ceeding forty per centum of their paid-up capital. The affairs of such 
companies shall be managed by a board of not less than five directors, 
each of whom shall own at least ten shares of stock, and a majority of 
whom shall be bona fide citizens of the State. Directors serve for one 
year, unless the articles of incorporation divide them into classes so that 
the terms of a part of them expire each year, in which case the terms 
may be for three or five years. They are required to take an oath for the 
faithful performance of their duties. Trust companies may hold real es- 
tate needed for the business, and such as is obtained in the settlement of 
debts due to them, but the latter must be disposed of as speedily as 
possible. Provision is made for the conversion of building and loan 
companies into trust companies. The provisions of the general incor- 
poration act are made applicable to trust companies, so far as not in- 
consistent with this act. 

(Council substitute for Council bill No. 10, February 28, 1908; 
106; Laws of 1907, chapters 4, 66, 103: Laws of 1909, chapters 96 and 
133; Laws of 1913, chapter 81.) 



STATE AND TERRITORIAL LAWS. 411 

Neav York. 

Seven or more persons may incorporate a trust company. An or- 
ganization certificate must be filed with the Superintendent of Banks, 
who is charged with the duty of satisfying himself of the need of the 
proposed corporation and of the advisability of its incorporation. Cap- 
ital required, at least $100,000 in towns or cities whose population does 
not exceed 25,000; at least $150,000 in cities of from 25,000 to 100,000 
inhabitants: at least $200,000 in cities of from 100,000 to 250,000; and 
at least $500,000 in larger cities. 

Powers specified: 68 To act as fiscal or transfer agent or registrar; 
to act as agent or attorney in fact for persons or for corporations, for- 
eign or domestic ; to receive deposits of trust moneys, securities and 
other personal property from persons or corporations; to discount and 
negotiate promissory notes, etc. ; to loan money on real or personal secu- 
rities ; to hold real estate necessary for the transaction of business, and 
such as is acquired in the satisfaction or partial satisfaction of debts 
due to the company; to act as trustee under any mortgage or bond, "and 
accept and execute any other municipal or corporate trust not prohibited 
by the laws of this State" ; to execute trusts for married women with 
respect to their separate property, to act as agent in the management of 
same; to act under the appointment of court as guardian, receiver or 
trustee of the estate of any minor; to act as depositary of moneys paid 
into court; to act under appointment of court as trustee, guardian, re- 
ceiver or committee of the estates of lunatics, idiots, persons of unsound 
mind or habitual drunkards, or as receiver or committee of persons in 
insolvency or bankruptcy; to act as executor, trustee under will or ad- 
ministrator; to exercise such legal trusts in regard to the management 
of property, real or personal, as may be confided to it by courts, per- 
sons, corporations, municipalities or other authority; to execute trusts 
and powers of every description received from any source ; to purchase, 
invest in and sell stocks, bills of exchange, bonds and mortgages and 
other securities ; to give its bonds or obligations for moneys or securities 
for moneys borrowed or received on deposit or for investment; to ac- 
cept drafts by customers, payable at a future date, and issue letters of 
credit payable within one year ; to do a safe deposit business ; to own 
stock of, and become a member of, a Federal Reserve Bank. No such 
corporation may make any contract or accept or execute any trust which 
it would not be lawful for any individual to make, accept or execute. 
The courts are authorized to appoint trust companies to act in the 
fiduciary capacities above named, or to act in any other fiduciary ca- 
pacity. In case of liquidation, the trust funds have a prior claim on the 
assets of the company. Interest at not less than two per cent, per an- 
num must be paid on all uninvested trust funds of not less than one 
hundred dollars. No trust company may act as depositary of court 



68 The powers of New York trust companies are printed in full in Chapter IV. 
29 



442 TRUST COMPANIES. 

funds unless designated as such a depositary by the Comptroller of the 
State. 

Every trust company is required to keep with the Superintendent of 
Banks a deposit of United States., New York State or New York City 
municipal bonds amounting in value to ten per cent, of its capital stock, 
but not less than $100,000 if its main office is located in a city of over 
500,000 inhabitants, $50,000 if in a city of from 100,000 to 500,000 
inhabitants, $30,000 if in a city of from 25,000 to 100,000 inhabitants, 
and $20,000 if located elsewhere. 

Trust companies possessing the right to do a title insurance business 
in April, 1914, are permitted to continue such business, but no other 
trust company shall hereafter have such power. Real estate purchased 
by a trust company or taken by it in settlement of debts must be sold 
within five years unless its office building is located thereon or time for 
sale is extended by the Superintendent of Banks. 

Trust companies are forbidden to lend to any one person or interest 
an amount exceeding one-tenth of their capital and surplus, discounts 
being included, except (a) loans to or investments in the interest bear- 
ing obligations of the United States, the State of New York or munici- 
palities in said State; (b) if the trust company is located, in a borough 
of two million inhabitants, loans to any State other than New York, to 
foreign nations, to municipal or railroad corporations or corporations 
subject to the Public Service Commission may equal twenty-five per cent, 
of capital and surplus ; and loans to other corporations or persons may 
equal twenty-five per cent, if upon bona fide discounts endorsed with- 
out limitation, or if the excess over ten per cent, is secured by collateral 
h'aving a margin of fifteen per cent.; (c) if the trust company is lo- 
cated elsewhere in the State, loans may equal forty per cent, of the 
capital and surplus under conditions similar to those described in (b). 

Trust companies are forbidden to make loans on the stock of an- 
other moneyed corporation so as to hold as collateral more than ten per 
cent, of the capital stock of such corporation. They may not make loans 
"upon the securities of one or more corporations, the payment of which 
loan is undertaken in whole or in part severally, but not jointly, by two 
or more individuals, firms or corporations" ; (a) if the borrowers or un- 
derwriters be obligated absolutely or contingently to purchase the secu- 
rities collateral to the proposed loan, unless they have paid at least 
twenty-five per cent, of the amounts for which they remain obligated; 
(b) if the trust company considering the loan be liable directly, indi- 
rectly or contingently for the repayment of any part of the proposed 
loan; (c) if the term of the proposed loan, including any renewal by 
agreement express or implied, exceeds one year; (d) if the amount ex- 
ceeds twenty- five per cent, of the capital arid surplus of the trust com- 
pany. They may not make loans upon real estate upon which there are 
pri ; or liens if the amount unpaid on such prior liens exceeds ten per 
cent, of the capital and surplus of the trust company considering the 
loan, or if the amount of the loan and prior liens exceeds two-thirds of 



STATE AND TERRITORIAL LAWS. 443 

the appraised value of the real estate. No trust company, nor its di- 
rectors, officers or employees may purchase any note or other evidence of 
debts issued by it for less than its face value. It may not loan upon, 
or purchase its own stock. It may not lend to enable the 
borrower to purchase its stock, unless on collateral with 
a margin of 15 per cent. It may not make loans to its 
directors, officers or employees except upon written approval of a 
majority of the Board of Directors; loans to corporations in which such 
person owns or controls a majority of the stock being considered loans 
to him; and it may not make any loan exceeding one-tenth of its capi- 
tal stock to any director. It may not invest more than ten per cent, of 
its capital and surplus in the stock of any private corporation; nor pur- 
chase or hold stock of another moneyed corporation if thereby the total 
stock of such corporation owned or held as collateral will exceed ten per 
cent thereof; but this does not apply to the stock of a safe deposit com- 
pany operated in direct conjunction. 

The capital of every trust company shall be invested in bonds and 
mortgages on real property in the State otherwise unencumbered, not ex- 
ceeding sixty per cent, of the value thereof, or in bonds of the United 
States, this State or any county or incorporated city therein. Such 
bonds must be carried at not more than their amortized value. 

No trust company may by any device of bookkeeping enter any of its 
assets in the name of any other corporation or person. It may not carry 
its office building and land at more than cost, unless with the written 
approval of the Superintendent. Its bookkeeping is subject to the 
supervision and control of the Superintendent in the same manner as is 
prescribed for all banks in section fifty-six of this chapter. Its stocks 
and bonds must be entered on the books at actual cost, but for purposes 
of determining undivided profits applicable to dividends shall be valued 
by amortization; but it may carry stocks and bonds on its books at mar- 
ket value. 

A trust company may maintain branches only in the city in which 
its principal office is located, but not elsewhere, provided the Superin- 
tendent gives written approval and the paid capital exceeds that re- 
quired by law by $100,000 for each branch. But a trust company hav- 
ing a combined capital and surplus of one million dollars or more may, 
with written approval of the Superintendent, maintain branches located 
outside the State, either in the United States or in foreign countries. 

Trust companies must maintain reserves against total demand de- 
posits as follows: Fifteen per cent, of such deposits if the company 
has an office in a borough whose population is 2,000,000 or over, ten per 
cent, of such deposits being maintained as reserves on hand; thirteen per 
cent, of such deposits if the company is located in a borough having a 
population of from 1,000,000 to 2,000,000, eight per cent, of such de- 
posits being maintained as reserves on hand; ten per cent, of such de- 
posits if the company is located elsewhere in the State, the amount of 
reserves on hand being four per cent, of such deposits if the company 



444 TRUST COMPANIES. 

is located in a city of the first or second class, but not falling within the 
above classification, and three per cent, of such deposits if located in a 
city of the third class or in a village. At least one-half of the re- 
serves on hand must consist of gold, gold bullion, gold coin, United 
States gold certificates or United States notes ; the remainder shall con- 
sist of any form of currency, other than Federal Reserve notes, author- 
ized by the laws of the United States. If the company is a member of 
a Federal Reserve Bank, it may maintain as reserves on deposit with 
such Federal Reserve Bank such portion of its total reserves as shall be 
required of members. 

Minors may control their deposits. When a deposit is made by one 
person as trustee for another, and the company has no further notice of 
the existence of a valid trust, the deposit may be paid to the person for 
whom it was made. Joint deposits may be paid to either, whether the 
other be living or not. 

Trust companies are authorized to take interest in advance at not 
more than the legal rate of six per cent, per annum, and to make reason- 
able charges on collection items, in addition to the legal interest charge. 
On call loans of five thousand dollars or more, secured by collateral, 
they may receive any interest rate agreed upon. Section 202 of the law 
states a number of rules for guidance in determining gross, earnings 
available for dividends. Before the declaration of a dividend, one-tenth 
of net earnings must be carried to surplus until it equals twenty per 
cent, of the capital. 

Stockholders are subject to double liability. Every trust company 
must be managed by a board of directors numbering from seven to 
thirty, each of whom must own at least ten shares of stock. The di- 
rectors must hold a regular meeting at least once a month and receive 
reports on certain matters detailed in the statute. In March or April 
and in September or October of each year they must as a board or by 
a committee examine the books, papers, affairs, loans and discounts of 
the company and prepare a written report thereof, of which a duplicate 
must be filed with the Superintendent. 

The Superintendent of Banks is required to call for reports of trust 
companies (and other banks) at least once every three months, and such 
companies must make the reports in the form prescribed by him within 
ten days after service of notice. The reports must be published in a 
local newspaper. The Superintendent must examine each company at 
least twice in each year. During the first ten days of September in each 
year each trust company must make a written report to the Superintend- 
ent, showing all deposits and dividends of fifty dollars or more un- 
claimed for a period of five years next preceding. 

The above synopsis is of the revised trust company law approved 
April 16, 1914, which is to "be construed as a continuation of the pro- 
visions of chapter ten of the laws of 1909," effective for the most part 
at above date, and in full Nov. 1, 1914. It repeals most, but not all, 
former legislation on the subject. 

(Taws 1914, chapter 369, approved April 16, 1914.) 



STATE AND TERRITORIAL LAWS. 115 

North Carolina. 

Trust companies are incorporated by special acts of the Legislature, 
which define their powers and their limitations. Also, by amendment of the 
banking laws, ratified March 8, 1907, trust companies, which are re- 
ferred to as corporations which transact "banking and trust, fiduciary or 
surety business", are made subject to the general banking law. Number 
of corporators required, three or more. The shares of stock must be of 
a par value of either $50 or $"100. The minimum capital allowed, of 
which at least fifty per centum must be paid in before beginning business, 
is $5,000 in towns of 1,500 inhabitants or less; $10,000 in towns of 
from 1,500 to 5,000 people, and $25,000 in larger places. The filing of 
certificate of incorporation and other formalities are provided for. Not 
more than twenty-five per centum of the capital may be invested in real 
estate, unless to protect loans or other debts due the company. A reserve 
of fifteen per centum of the deposits must be maintained, of which at 
least two-fifths must be in cash. Loans to one person, firm or corpora- 
tion are limited to ten per centum of the paid capital, but this does not 
apply to companies having a capital of $100,000 or less. The stock 
holders are subject to double liability. 

All banking corporations, including trust companies, are under the 
supervision of the Corporation Commission. To this commission they 
must render at least four reports each year, and such reports must be 
published in local papers. The reports must show "the entire amount of 
trust and surety and fiduciary and guarantee business as a part of the 
liabilities." If it is found that "such liabilities are equal to the amount 
of the capital stock, the said Corporation Commission shall have the 
authority, and it is hereby empowered, to make such rules and regula- 
tions and reductions of said liabilities as it may deem necessary for the 
protection of the creditors and depositors of such banking institution." 
The Commission must appoint an examiner, who must examine each com- 
pany at least once a year. 

The granting of a number of trust powers is authorized by the "In- 
surance Act of 1899", which provides for the formation of fidelity insur- 
ance companies. These are referred to in the marginal note as "bond 
and trust companies", and their purpose is thus stated: "To guarantee 
the fidelity of persons in positions of trust, private or public, and to act 
as surety on official bonds, and for the performance of other obligations." 
They must have ten or more corporators, and the words "insurance com- 
pany" must form a part of their titles. The powers specified for such 
companies are to do a fidelity insurance business and to act as surety on 
bonds; to do a title insurance business; to act as guardian, trustee, 
assignee, receiver, executor or administrator in the State, without giving 
bond; and the proper courts and officers are clothed with authority to 
appoint these companies to such trusts, whether the companies be resi- 
dents of the State or not. Such companies must make an annual state- 



446 TRUST COMPANIES. 

ment to the Insurance Commissioner, and must get from him a license, 
for which the annual fee is $25 for domestic and $100 for foreign com- 
panies. The original idea of the trust company as a kind of insurance 
company is noticeable in this act. 

Banks and trust companies are relieved from liability on forged or 
raised checks unless notified within six months after receipt of the 
voucher by the depositor. Counties in the State are authorized to abol- 
ish the office of county treasurer, and appoint banks or trust companies 
to perform his duties, without compensation. 

(Laws of North Carolina, Revisal of 1905, chapter 7, sections 222 
to 251. Chapter 100, passim, especially sections 4726, 4799 to 4804. 
Statutes 1907, chapter 829. Statutes of 1909, chapters 45, 105. Stat- 
utes of 1913, chapter 142.) 

North Dakota. 

Nine or more persons may incorporate to conduct the business of "an 
annuity, safe deposit, surety and trust company", to have perpetual suc- 
cession. Articles of incorporation must be filed, and other preliminaries 
attended to as prescribed in chapter 11 of the Civil Code. The capital 
must be at least $100,000, divided into shares of $100 each. Of this 
$50,000 must be paid in before commencing business, and the balance 
must be paid within two years. The $50,000 required to be paid in be- 
fore commencing business must be invested in bonds of the United States, 
or of the State of North Dakota, or in the bonds of other States, which 
have the approval of the State Auditor and State Examiner, or in the 
bonds or obligations of townships, school districts, cities, villages and 
counties within the State, which bonds or obligations have not been 
issued as a bonus for, or purchase of, or subscription to any railroad or 
other private enterprise, and whose total bonded indebtedness does not 
exceed five per centum of the then assessed valuation thereof, or in bonds 
or promissory notes, secured by first mortgages or deeds of trust upon 
unencumbered real estate in the State worth three times the amount of 
the obligation so secured. These securities must be assigned, trans- 
ferred and delivered to the State Auditor, to be held by him as collateral 
security for the depositors and creditors of said corporation, and for the 
faithful execution of any trusts it may undertake. The company shall 
be managed by a board of directors, not less than nine nor more than 
fifteen in number, a majority of whom shall be citizens of the State, 
and each of whom must own at least ten shares of stock. The specified 
powers of such corporations are: To hold real estate necessary for the 
convenient transaction of its business, and for the use and occupation of 
its officers, agents and employees, and for the safe keeping of its assets, 
deposits and property held in trust, and such as is acquired in the satis- 
faction of debts due to it; but no part of its funds may be invested in 
real estate except as above authorized, except that trust funds may be so 



STATE AND TERRITORIAL LAWS. 447 

invested if the instrument creating the trust or a particular contract so 
specifies, and not otherwise; to loan money on mortgage security; to 
purchase notes, bonds, mortgages and other evidences of indebtedness; 
to hold in trust any real or personal property by order of court, or from 
corporations or persons, and to execute any legal trusts with regard to 
same; to execute trusts for minors and for married women with respect 
to their separate property, real or personal, and to act as agent for the 
management of same; to act as fiscal and transfer agent and registrar; 
to hold on deposit for savings account, or for safe keeping, or in escrow, 
moneys and securities in the keeping of public or private officials or of 
persons holding fiduciary appointments, the officers or persons so de- 
positing being relieved from liability for such deposits; companies re- 
ceiving savings deposits shall be subject to the laws of the State regard- 
ing reports and examinations of Savings banks; to act as trustee, assignee, 
receiver, administrator, executor, guardian of the estate of any minor, 
lunatic, imbecile, spendthrift, habitual drunkard or other person dis- 
qualified to manage an estate; courts are authorized to make such ap- 
pointments; "to receive deposits of money for general savings account, 
for safe keeping, or for investment"; "to loan money upon such securities 
as may be deemed advisable by its board of directors, and to borrow 
money in like manner upon the security of its own property or credit"; 
to act as attorney in fact for public or private corporations or persons 
in the management of real or personal property; to do a title insurance 
business; to do a fidelity insurance business. Trust funds and property 
must be kept separate from the property of the company and be readily 
identifiable. Special directions regarding investments in an instrument 
creating a trust must be followed. Trust companies may accept and 
execute any trust herein authorized, or act as sole surety on bonds, with- 
out giving security, other than the deposit with the State. Trust funds 
of over $100 in amount, not required for the uses of the trust for a year, 
must be invested in the classes of securities specified for the deposit with 
the State. Loans may not be made to directors, officers or employees; 
nor shall such persons become indebted to the company in any way 
unless authorized in regular form by the directors or investment com- 
mittee. Such corporations are subject to further orders of courts ap- 
pointing them to fiduciary offices, and must render statements called for 
or required by law to such courts. They are subject to the general 
jurisdiction of the district court of the county. They must render at 
least five reports each year to the State Examiner, giving details 
called for by him, and must publish a condensed statement of such report 
in a local newspaper. The Public Examiner must examine such com- 
panies once every six months, without notice to officers thereof, or oftener 
if required by written, verified information from a person interested in a 
trust held by the company. If unsafe conditions are found and persisted 
in, he shall notify the Attorney-General, who shall institute such pro- 
ceedings as are called for. 



448 TRUST COMPANIES. 

(Compiled Laws, 1913, chapters 28-31, especially chapter 31, para- 
graphs 5205-5220.) 

Ohio. 

Five or more persons may become incorporated to establish "a com- 
mercial bank, a savings bank, a safe deposit company, a trust company, 
or to establish a company having departments for two or more, or all 
of said classes of business". The articles of incorporation must specify 
what classes of business are to be included. Capital required, of a trust 
company, or of a combined trust company and safe deposit company or 
of a combined trust company and savings bank, $100,000; of a combined 
trust company, savings bank and safe deposit company, or of a combined 
trust company, savings bank, commercial bank and safe deposit company, 
$125,000. Fifty per centum of the capital must be paid before begin- 
ning business, and the balance at the rate of ten per centum per month. 
The board of directors must number from five to thirty, three-fourths of 
whom must be residents of the State, and each of whom must own at 
least five shares of stock. They must take an oath of office. They may 
elect an executive committee of at least three of their number, which 
must meet at least once a month. 

The trust powers specified are: To do a safe deposit business; to col- 
lect income or principal of property held for safe keeping; to act as reg- 
istrar and transfer agent; to act as depository of court funds; to receive 
and hold money or property in trust or on deposit from fiduciaries, corpo- 
rations or individuals ; to act as trustee under any will or instrument creat- 
ing a trust for the care and management of property, "under the same 
circumstances, in the same manner, and subject to the same control by 
the court having jurisdiction of the same, as in the case of a legally 
qualified person" ; to execute "all such trusts of every description as 
may be committed to such company by any person or persons, or any 
corporation, by grant, assignment, devise or bequest, or which may be 
committed or transferred to, or vested in, such company, whether the 
same be to act as executor, administrator, assignee, guardian, receiver or 
trustee, or in any other trust capacity", by order of court; to receive and 
take any real estate which may be the subject of any such trust, and to 
act as agent under any power; provided, any such appointment as 
guardian shall apply to the estate only, and not to the person. (But 
that part of the statutes which authorizes probate courts to appoint trust 
companies administrators, etc., was by the Supreme Court of the State, 
in 1903, declared unconstitutional.) Courts may order moneys paid to 
them, or in their charge, deposited in trust companies. Minors may 
control their accounts. 

Before dividends are declared one-tenth of the net profits must be 
carried to surplus until same equals 20 per centum of the capital. 
Stockholders are subject to double liability. Checks may not be 



STATE AND TERRITORIAL LAWS. 449 

certified unless the drawer has a balance to cover same, and certified 
checks must be charged at once. Violation of this rule is punishable by 
fine or imprisonment in the penitentiary, or both. Embezzlement, the 
making of false entries, fictitious borrowing with fraudulent intent to 
deceive examiners, the making of false statements or reports with 
fraudulent intent, are crimes punishable by imprisonment in the peni- 
tentiarv or fine, or both. 

A separate trust department must be maintained, whose assets shall 
not be liable for any other liabilities of the corporation; and separate 
sets of books must be kept for each department maintained. No trusts 
may be accepted unless the company has made a deposit with the 
treasurer of State, said deposit to be $50,000 if the company's capital 
is $200,000 or less, and $100,000 if its capital is larger. This deposit 
may be in cash, in government or municipal bonds or in certain railroad 
bonds. The securities may be exchanged, and the company may receive 
the income so long as solvent. 

The reserve required (which is the same as that required of savings 
banks), is 15 per centum of total deposits. At least six per centum of 
demand deposits and at least four per centum of time deposits must be 
in cash in the vaults; the balance of the reserve may be on deposit with 
other banks or trust companies designated by the board of directors, 
whose resolution regarding same shall be certified to the Superintendent 
of Banks. But where the reserve required to be kept in the vaults ex- 
ceeds $500,000, the excess above that amount may be invested in United 
States bonds. No reserve is required on trust funds. Trust companies — 
and other banks — may own such real estate as is "useful for the con- 
venient transactions of its business", from portions of which not re- 
quired for its business a revenue may be derived; but the cost of land 
and buildings may not exceed 60 per centum of paid capital and surplus. 
It may also hold such real estate as is transferred to it as security for 
debts ; and such as is obtained by foreclosure or on j udgments or decrees, 
but the last named must not be held more than five years except on 
authorization by the Superintendent of Banks. 

Loans to one interest including overdrafts, may not exceed 20 per 
centum of the paid capital and surplus. Bona fide discounts are not con- 
sidered as money borrowed. Loans upon real estate must be approved 
b}^ the board of directors, and may not in the aggregate exceed 60 per 
centum of the capital, surplus and deposits, and real estate loans must 
be upon real estate situated in Ohio or states immediately adjacent 
thereto, and shall not exceed 40 per centum of the value of said real 
estate, if unimproved, or 60 per centum of its value, if improved. Loans 
may not be made upon the company's own stock; nor may same be pur- 
chased except to prevent loss upon debts previously contracted in good 
faith: stock so acquired shall be sold within six months. Not more than 
20 per centum of the capital and surplus may be invested in any one 



450 TRUST COMPANIES. 

stock, security or loan, except in a building and vaults or in specified 
government and municipal securities. The exact limitations regarding 
loans and investments depend upon whether the corporation is organized 
as a trust company only, or as a trust company with other departments, 
— banking, savings and safe deposit. In the investment of trust funds, 
the directions of the instrument creating the trust must be followed. 
Unless otherwise directed in such instrument, such funds may be invested 
in a general trust fund; but no trust funds may be mingled with the other 
assets of the company. 

Trust companies, and all other banking institutions except building 
and loan associations, are under the supervision of the Superintendent 
of Banks, to whom they must render at least four reports each year, 
upon his calls, which shall be made (as of a past day) so far as possible 
for the same days for which reports of national banks are called. 
Special reports may be called at the discretion of the Superintendent. 
The reports must be published in local papers. The Superintendent 
must examine each company at least twice each year, without previous 
notice, in the presence of a majority of the members of the executive 
committee. Courts may appoint persons to examine a company regard- 
ing a trust, upon written application of a party interested in the estate 
held under such trust. Examinations must be made annually by a com- 
mittee of at least two directors or stockholders, and a copy of their report 
filed with the Superintendent of Banks. 

None but companies duly authorized may use the terms "bank," 
"trust," "trust company," etc., in titles. Joint deposits are payable to 
either, whether the other be living or not. The circulation of deroga- 
tory and untrue statements regarding banks and trust companies is pun- 
ishable by fine or imprisonment, or both. Banks are not liable on forged 
or raised checks unless notified in writing within one year after vouchers 
are 'returned or notice is given that vouchers are ready. 

(Page and Adams' Annotated General Code, 1912, Title 9, Division 
5, especially sections 9774-9789 and 9816-9849. Acts of 1908, H. B. 
833. Acts of 1909, S. B. 119. Acts of 1910, S. B. 43, S. B. 86, H. B. 
211, H. B. 334. Acts of 1911, H. B. 578. Acts of 1913, H. B. 46.) 

Oklahoma. 

Three or more persons may incorporate a trust company. The num 
ber of years the corporation is to continue may not exceed fifty. Cap- 
ital required, not less than $25,000 in towns of less than 5,000 inhabi- 
tants; not less than $50,000 in cities of from 5,000 to 15,000 inhabi- 
tants; not less than $100,000 in cities of from 15,000 to 25,000 inhabi- 
tants; not less than $200,000 in larger cities. The capital may 
in cash, and the balance to be paid within six months. The capital may 
not exceed $10,000,000. The affairs of the corporation shall be man- 



STATE AND TERRITORIAL LAWS. 451 

aged by a board of directors, not less than five nor more than twenty- 
five in number, each of whom must be a stockholder. If the number 
exceeds five, they shall be divided into three classes so that the terms of 
one-third shall expire each year, the terms of each thereafter being 
three years. 

Powers specified: The ordinary powers of corporations; to receive 
savings accounts, and the payment to them on their order of deposits 
made by minors shall be binding on them; to guarantee special deposits; 
to do a safe deposit business; to accept and execute trusts and duties of 
every description committed to them by persons or corporations; to ac- 
cept and execute court trusts; to act as assignee, receiver, trustee and 
depository; to hold in trust any real or personal property from whatever 
source received, and in whatever manner conveyed, and to execute any 
lawful trusts in regard to same; to act as surety on bonds, and to guar- 
antee against loss any principal or surety on a bond; to do a fidelity in- 
surance business; to act as agents and attorneys in fact for persons and 
corporations for the management of real or personal property and for 
the investment of money; to act as registrar or transfer agent; to execute 
trusts for married women with respect to their separate property, real or 
personal, and as agents for the management of same; "and generally 
to have and exercise such powers as are usually had and exercised by 
trust companies"; to act as executor, administrator, guardian or curator 
of any infant, insane person, idiot or habitual drunkard, or trustee of 
any convict in the penitentiary; to loan money upon real estate and col- 
lateral security; to issue its notes and debentures payable at a future 
time, and to pledge its mortgages on real estate and other securities as 
security therefor, which notes and debentures may be issued to an amount, 
not exceeding in the aggregate, ten times the paid capital of the com- 
pany, and shall in no case exceed the amount of the first mortgages 
pledged to secure their payment ; to buy and sell the bonds and warrants 
of this State, and all other kinds of Government, State and municipal 
bonds, and all kinds of negotiable and non-negotiable paper, stocks and 
other investment securities. Moneys placed in charge of the corporation 
may be invested in loans secured by real estate or other sufficient col- 
lateral security, in public bonds of the United States, or of this State 
or of any State, or in the bonds or stocks of any county or school 
district, or any incorporated city, town or village of any State. Such 
corporation may own only such real estate as is required for the tran- 
saction of its business, and such as is acquired in the settlement of debts 
due to it. The directors are required to render full statements to the 
stockholders as often as once in each year. The books and records of 
the company shall be kept open "for the inspection of all persons 
interested." Trust companies may qualify as guardian, curator, 
executor, administrator, assignee, receiver, trustee or depositary 
of money in court, without giving bond as such, and become 
sole guarantor or surety upon any bond required by the laws of the 



452 TRUST COMPANIES. 

State, any other statute to the contrary notwithstanding, as well as 
to insure the fidelity of persons holding places of public or private trust; 
provided, such company shall first deliver into the custody of the Treas- 
urer of the State a deposit of $50,000, consisting of cash or Govern- 
ment, county or municipal bonds, or bonds or warrants of the State, 
or notes or debentures secured by first mortgage or deeds of trust 
on real estate situated in the State, worth at least double the amount 
loaned thereon, and certain other securities named in the statute, said 
bonds or securities not to be received or held at a rate above par, but if 
their market value is less than par they shall not be held above their 
actual market value. The fund so deposited shall be primarily liable for 
the obligations of the company in the above-mentioned fiduciary capaci- 
ties. This fund must never be less than one-half the annual premiums 
and compensations earned by the company in trust capacities during 
the previous year; it must be increased each year, if necessary, to meet 
this requirement. Stockholders are subject to double liability. 

Trust companies are under the supervision of the Bank Commis- 
sioner, to whom they must make at least four reports each year, on his 
call; and by whom they are to be examined at least twice a year. 

In 1911 an amendment to the law was adopted, containing the fol- 
lowing provision: "No such corporation hereafter organized shall do a 
banking business, nor shall any such corporation doing business in this 
State have the benefit of the Depositors' Guaranty Fund, or be permit- 
ted to own stock in any bank organized in this State." 

(Wilson's Revised and Annotated Statutes, 1903, chapter 4, chapter 
18, article 14, sections 1119-1135. Laws of 1905, chapter 10, article 3. 
Laws of 1908, H. B. No. 615, approved May 26, 1908. Laws of 1911, 
chapter 43.) 

Oregon. 

Five or more persons may organize a trust company under the re- 
vised banking laws of 1913. Capital required, $50,000 in cities or 
towns of less than 15,000 population, and $100,000 in larger cities. 
Powers specified, to act as executor, administrator, guardian, assignee, 
trustee, receiver, depository, "and to discharge any duty, office or posi- 
tion of trust." The courts are authorized to appoint trust companies to 
act in such fiduciary capacities. Trust companies have all the powers 
of State banks, including the right to do a savings bank business, and 
are governed by the laws relating thereto except as modified by the laws 
relating specifically to trust companies. 

Trust funds may be invested only in United States bonds, the bonds 
of any State or any county, school district or municipal coloration 
therein which has not defaulted in the payment of principal or interest 
thereof within five years, or in mortgages on unincumbered real estate 
worth at least twice the amount loaned thereon, or in collateral loans 



STATE AND TERRITORIAL LAWS. 453 

with a margin of at least twenty per cent., or in such other bonds or 
securities as the Superintendent, of Banks may approve. The Superin- 
tendent may require any trust company to dispose of any security which 
he does not approve. 

Before accepting any trusts or trust funds, a trust company must 
make with the State Treasurer a deposit amounting to $25,000, if its 
capital is less than $100,000, or $50,000, if its capital is $100,000 or 
more. This deposit may be in cash or in bonds of the United States, 
the State of Oregon or of counties, school districts or cities therein 
meeting certain conditions specified, or in first mortgages on real estate 
in the State worth at least twice the amount loaned thereon. If the cash 
and securities held in trust exceed ten times the amount of the deposit 
with the State Treasurer, such deposit must be doubled; but it need not 
exceed $100,000. A separate trust department must be maintained, with 
its assets segregated and so marked as to indicate the department. 

Trust companies are subject to the supervision of the Superintendent 
of Banks. He must examine the trust department at least once a year, 
and an annual report regarding the trust department must be submitted 
to him each Januar}^. As a bank, the company must be examined by the 
Superintendent twice each year or oftener, and must make to him, ac- 
cording to the forms he prescribes, not less than five reports each year, 
as of the days for which reports of National banks are called. The 
use of the word "trust" in titles is forbidden except to corporations 
complying with this act. 

Trust companies come under the definition of "banks" as given in the 
law. Banks may hold real estate (except that held in trust) only as 
needed for the transaction of the business, including premises in the 
same building to rent for profit, to cost not exceeding fifty per cent, of 
its paid capital and surplus, or such real estate as it acquires on fore- 
closures or in settlement of debts. The latter must be sold within five 
years. Before the declaration of a dividend, one-tenth of net profits 
must be carried to surplus until it equals twenty per cent, of the paid 
capital. 

Banks may not loan to one person or interest more than twenty per 
cent, of their paid capital and surplus, bona fide discounts excepted; 
may not loan over fifty per cent of their capital, surplus and commer- 
cial deposits on real estate security, and no mortgage loan shall exceed 
fifty per cent, of the value of the real estate except when taken to 
secure a debt previously contracted. A bank may not invest more than 
twenty-five per cent, of its assets in stocks of corporations, and all such 
stocks must be charged on the books at their cost to the bank. Loans 
to officers, directors or employees or to concerns in which they are in- 
terested, may be made only with the approval of a majority of the di- 
rectors. 

Mjinors may control their deposits. A bank may refuse to pay a 
check to a person so under the influence of liquor as to be incapable of 



454 TRUST COMPANIES. 

transacting business. Banks combining the business of a commercial 
bank, trust company and savings bank must keep separate books or ac- 
counts for each department, and must segregate the assets of the savings 
department, as well as of the trust department. 

The reserve required is fifteen per cent, of total deposits, for banks 
located in cities or towns of less than 50.000 inhabitants, and for banks 
located in larger cities, twenty-five per cent, of total demand deposits 
and fifteen per cent of the time and savings deposits. Of the total re- 
serves, two-thirds may be on deposit with banks approved by the Super- 
intendent. Cash items may not be counted as part of the reserve. 

(Trust Company Law, Chapter 354, 1913 Session Laws. Laws re- 
lating to banks and to the banking department, sections 4557 to 4594 of 
the Revision of 1913.) 

Pennsylvania. 

Although this State contains more trust companies than any other, 
and rivals New York in the early development of such corporations, its 
statutes relating to corporations doing the business of a trust company 
are in need of revision and codification. The number of sections of the 
statutes relating to trust companies by name is very small. Most of the 
ordinary powers of trust companies are enumerated in the statutes re- 
lating to title insurance companies. 

The specified powers of such companies are: To do a title insurance 
business; to receive and hold on deposit and in trust and as security, 
estate, real and personal, including the notes, bonds and obligations of 
States, individuals, companies and corporations, and the same to pur- 
chase, collect, adjust and settle, sell and dispose of in any manner, with- 
out proceeding in law or equity; provided, that nothing herein contained 
shall authorize said companies to engage in the business of banking; to 
do a fidelity insurance business; to do a safe deposit business; to act as 
assignees, receivers, guardians, executors, administrators, "and to take 
and receive and execute trusts of every description not inconsistent with 
the laws of this State or of the United States"; to receive deposits of 
moneys, and to issue their obligations therefor; to invest their funds, other 
than funds committed to their care by the orphan's court, in and to 
purchase real and personal securities; to loan money on real or personal 
security, and to invest funds committed to their care by the orphan's 
court in such securities as shall be approved by such courts; courts into 
which moneys are paid or are to be placed by order or judgment, may 
direct same to be deposited with any such corporation; to act as fiscal 
or transfer agent or registrar; to become sole surety in any case where, 
by law, one or more sureties may be required for the faithful perform- 
ance of any trust or duty; to hold any and all such pieces of real prop- 
erty as may be the subject of any insurance made by such companies 
under the powers conferred by their charters, and the same to dispose of 



STATE AND TERRITORIAL LAWS. 4,55 

in any manner they see proper; "to purchase and sell real estate and take 
charge of the same"; to become security for the faithful performance 
of duty in several cases specified and to become security for other pur- 
poses named in the statute; provided that before exercising any of the 
above-mentioned powers, such corporations shall have a paid-up capital 
of not less than $125,000. When acting in fiduciary capacities the cap- 
ital of such companies shall be taken as the security required by law for 
the faithful performance of duty, and shall be absolutely liable in case 
of default. Persons holding fiduciary appointments may deposit the 
securities or other valuables for safe keeping with such companies. 
Courts making fiduciary appointments to such companies may have the 
companies examined. Trust funds and investments must be kept separate 
from the assets of the company, and investments made by the company 
as fiduciary must be so designated as to clearly show to what trust they 
belong. The powers of doing a safe deposit business and of acting as 
fiscal or transfer agent or registrar are given to all companies incor- 
porated under the laws of the Commonwealth "which are by their charters 
authorized to act as trustees, receivers, assignees, guardians and commit- 
tees." Such companies may increase their capital stock to an amount 
not exceeding $2,000,000. 

Previous to 1873 trust companies in the State were incorporated by 
special acts of the Legislature, but the constitution of that year forbade 
such special charters in the future. No provision for the incorporation 
of such companies under general law was made until 1881. 

Trust companies are under the supervision of the Commissioner of 
Banking. They must render to him not less than two reports each year, 
according to the form prescribed by him, and within five days (unless 
he extends the time) after the receipt of a request therefor from him. 
He may also call for special reports. Summaries of the reports must be 
published in a local newspaper at least three times. It is the duty of the 
Commissioner of Banking to examine such companies as often as he shall 
deem proper. If unsafe conditions are revealed, he must notify the At- 
torney-General, who shall institute proceedings for the appointment of 
a receiver; or, if the conditions seem to make it necessary, the Com- 
missioner may appoint a temporary receiver. No director of such a com- 
pany shall receive as a loan an amount greater than ten per centum of 
the paid capital and surplus ; and the gross amount loaned to all officers 
and directors of such corporations, including concerns in which they are 
interested,, shall not exceed twenty-five per centum of the paid capital 
and surplus. Such companies may not loan on their own stock; nor shall 
they purchase same, unless to prevent loss on a debt previously contract- 
ed in good faith, in which case the stock so purchased shall not be held 
for a longer period than six months, "if the same can be sold for what 
such stock cost the corporation." It is a misdemeanor punishable by a 
fine not exceeding $1,000 and imprisonment not exceeding two years, or 
both, for any director, officer or employee of a bank, trust company or 



4,56 TRUST COMPANIES. 

building and loan association to make a false statement or entry on the 
books or to subscribe to or exhibit same with intent to deceive, or to 
wilfully or knowingly subscribe to a false report. All such corporations 
must furnish a receipt in full, by pass-book or otherwise, for all moneys 
received as deposits or otherwise. The reports must set out in full the 
aggregate of these liabilities, which must not be concealed for any pur- 
pose. If the company borrows money the amount must be set out in full 
on the books and in all reports required by law. It is also illegal to 
conceal any assets. Violations of these provisions constitute a misde- 
meanor. For purposes of taxation, trust companies must render an an- 
nual report on or before June 20, stating the number of shares of the 
company outstanding, their actual value, etc. 

The reserve requirements, which apply to all State banks, Savings 
banks and Trust Companies, are as follows : If the company receives de- 
posits subject to or payable on demand, it must keep a reserve of 15 per 
centum of the aggregate of all immediate demand liabilities. If the com- 
pany receives time deposits "payable at some future time", it must keep 
a reserve of 7% P er centum of all time deposits. One-third of the reserve 
must be in cash; one-third may be in certain specified bonds; the bal- 
ance may be on deposit in any bank or trust company in Pennsylvania 
approved by the Commissioner of Banking, or in companies in reserve 
cities in other States approved by him. 

None but corporations subject to the supervision of the Commis- 
sioner of Banking (or similar officer of another State) may use the 
word "trust" in titles. Embezzlement in banks and trust companies is 
punishable by fine and imprisonment. The circulation- of false rumors 
regarding banks and trust companies is a misdemeanor punishable by 
fine and imprisonment. Officers, directors or employees may act as no- 
taries public, but not for the company's business. Directors of banks, 
trust companies, etc., must take an oath of office, to honestly and dili- 
gently administer the office, and that each is the owner of unhypothe- 
cated stock to the par value of $300. 

The holders of checks issued by banks and trust companies are, in 
case of liquidation, entitled to the same preference as depositors over 
other creditors. In case of such liquidation, the funds are to be ap- 
plied to satisfying the claims, first of depositors, either demand or time; 
second of other liabilities, and third of stockholders; provided, that trust 
money and property must be kept separate, and distributed to benefici- 
aries of trusts. Corporations and persons loaning money may, upon be- 
ing granted a license, upon certain conditions, charge brokerage and an 
examination fee on loans, in addition to the legal rate of six per cent, 
per annum. 

Trust companies may renew or extend their charters for a period of 
twenty years on complying with the provisions of the law of May 10, 
1089 



STATE AND TERRITORIAL LAWS. 457 

(Laws of June 11, 1885, §§ 1,2,3; May 9, 1889, § 1; May 10, 1889, 
§ 1; Feb. 11, 1895, §§ 1, 2, 7, 9; May 29, 1905; June 24, 1895, 
§ 1, June 26, 1895; June 27, 1895, §§ 1, 2; May 29, 1901; June 11, 
1901; April 21, 1903 [art. 162] ; Acts of 1905, No. 131; Acts of 1907, 
Nos. 141, 150, 151, 512, 525. Acts of April 22, April 23, April 27, 
1909; Act of June 3, 1911; Acts of May 21, May 23, May 28, June 5, 
1913. The Title Insurance Company laws are found in Pepper and 
Lewis's Digest, Vol. 3. [Supplement, 1894-97], chapter 12, §§90-109.) 

Rhode Island. 

Trust companies in this State, which were formerly incorporated 
only by special act of the Legislature, may since May 26, 1908, be or- 
ganized under the general banking law passed on that date, to which all 
trust companies in the State must conform. Fifteen or more persons, 
all of whom must be citizens of the State, may associate for the purpose 
of forming a trust company. The incorporation proceedings are detailed 
at length. No shares of stock may be issued until their par value has 
actually been paid in cash. Branches may be established after obtaining 
the consent of the Board of Bank Incorporation. None but regularly in- 
corporated trust companies may use the words "trust company" in signs, 
titles, etc 

The powers specified, in addition to ordinary powers of corpora- 
tions, are to receive and hold moneys in trust or on deposit; to allow 
interest on same; to make such loans and investments as are not pro- 
hibited by this act; to hold on deposit moneys or to receive and manage 
other property in charge of executors, administrators and other fidu- 
ciaries, who are released from liability for funds or other property so 
deposited; to do a safe deposit business; to act as executor, adminis- 
trator, custodian, conservator or guardian of any estate, giving bond in 
the same manner as individuals so acting, but surety on such bonds 
shall not be required except upon written demand of a person pecuniar- 
ily interested ; to act as assignee, receiver ; to accept trusts of every 
description committed to it by persons, corporations or courts; courts are 
authorized to appoint such a corporation as administrator, custodian, 
guardian (of the estate only) or conservator, except that they may not 
appoint it administrator or custodian upon the estate of a wife dying 
intestate unless upon petition of the husband; to be depositary of court 
funds. 

Trust companies are required to deposit with the Treasurer of the 
State, in cash or in certain specified securities, an amount equal to 
twenty per centum of the capital as security additional to the capital 
for the faithful performance of trust duties. Substitutions of these 
securities may be made, and the income goes to the company depositing 
them. Banks and trust companies must maintain reserves of fifteen 

30 



458 TRUST COMPANIES. 

per centum of aggregate deposits, of which two-fifths must be in cash 
on hand. The balance may be on deposit with authorized reserve agents. 
These reserve requirements do not apply to the funds of the savings or 
"participation" department, if the company has complied with the law 
relative thereto, which requires that a guaranty fund equal to five per 
centum of the savings deposits be accumulated by setting aside fom one- 
eighth to one-fourth of one per centum of the net profits of the depart- 
ment each year. A separate savings department must be maintained, 
whose assets are not subject to other liabilities of the company until sav- 
ings deposits have been paid. The investments permitted to this depart- 
ment are specified at great length, and include municipal bonds, certain 
steam and electric railroad bonds, certain bank stocks, loans secured by 
the foregoing, securities and notes of certain gas, water, electric light or 
power, telephone, railroad or street railway companies, real estate mort- 
gages under certain limitations, and promissory notes under limitations. 

Trust companies may not make loans for the repayment of which 
they are directly or contingently liable; or loans in excess of twenty per 
centum of the capital, surplus and profits, the repayment of which is un- 
dertaken severally, but not jointly, by two or more individuals, corpora- 
tions, firms or other parties. Loans to one interest, bona fide discounts 
excepted, may not exceed ten per centum of the paid capital and sur- 
plus, nor in any event thirty per centum of the capital. Overdrafts by 
officers or employees are forbidden, and loans to them must first be sub- 
mitted in writing to, and be approved by, the directors or executive com- 
mittee. The company may not loan on its own stock, or purchase same 
except to prevent loss on debts previously contracted in good faith, and 
stock so acquired shall be sold in one year. Minors may control their 
deposits. Joint accounts of two persons may be paid to either or to the 
survivor. Ninety days notice may be required for withdrawals on sav- 
ings accounts. The deposits of a trust company may not exceed ten 
times the amount of the surplus and paid capital. A number of offences 
and crimes are made punishable by fine or imprisonment or both. 

Trust companies are under the supervision of the Bank Commis- 
sioner, to whom they must make at least five reports each year, on his 
call. The information to be given is specified in detail, and is quite full. 
It includes trust funds. The Commissioner must examine each company 
at least twice in each year, and if it is connected with a National bank, 
must if possible, work simultaneously with the National bank examiner. 
Banks and trust companies are released from liability on forged or 
raised checks unless notified within one year after return of voucher. 

(Laws of 1908, chapter 1590; Laws of 1909, chapters 398, 404; 
Laws of 1910, chapters 553, 555; Laws of 1911, chapter 687; Laws of 
1912, chapter 826. See General Laws, chapters 229-237.) 



STATE AND TERRITORIAL LAWS. 459 

South Carolina. 

Trust companies in this State are incorporated by special act of the 
Legislature, such special charters defining the powers and limitations of 
such corporations. They may also be incorporated under the Business 
Corporation Law. There are few general laws relating to trust com- 
panies, but they are governed by the banking laws, in part at least. Any 
banking corporation or trust company, with a bona fide capital of at 
least $25,000 actually paid in, if so authorized by its charter, may be 
appointed executor, administrator, receiver, assignee, guardian (of the 
estate only, not of the person), trustee for the care and management of 
property, "under the same circumstances, in the same manner, and sub- 
ject to the same control by the court having jurisdiction of the same, as 
a legally qualified person." The capital and stockholders' liability are 
held as security for the faithful performance of duty, and no surety shall 
be required upon bonds filed by such company, except that the court 
making any of the above-mentioned appointments, save that of trustee, 
may, upon application of an interested person, require such additional 
security as the court considers proper. The State Bank Examiner is re- 
quired to examine each company at least once a year, and also upon peti- 
tion of stockholders representing one-fourth of the stock. The examiner 
must, without previous notice, call for at least four statements each year, 
and these statements must be published in local papers. 

The Bank Examiner may assume control of any bank or trust com- 
pany upon request of a majority of the directors. Banking institutions 
operating branches must publish statements of the assets and liabilities 
of such branches in the counties where located, the same as though they 
were independent banks. Banks and trust companies are authorized to 
become members of the National Reserve Association. 

(Laws of 1903, No. 37; Laws of 1904, No. 215; Laws of 1906, 
No. 64; Laws of 1911. Nos. 2 and 3; Laws of 1912, No. 450; Laws of 
1913, Nos. 33 and 51; Laws of 1914, Nos. 268, 332, 333. See Code of 
Laws, 1912, chapter 43.) 

South Dakota. 

Seven or more persons may incorporate a trust company, having 
power also to do a banking business. Its term of existence may not ex- 
ceed twenty years. Capital required, at least $50,000 in cities of less 
than 5,000 inhabitants, and $100,000 in larger cities, full paid in cash. 
Within six months after commencing business, or before accepting any 
trust, it must deposit with the State Treasurer not less than fifty per 
cent, of its capital, and not more than -$100,000; said deposit to be in 
mortgages on unincumbered real estate within the State, worth double 
the amounts secured thereby, or in bonds of the United States, or of 
States which have not defaulted within ten years, or undefaulted mu- 
nicipal bonds within the State. Number of directors required, seven, of 



460 TRUST COMPANIES. 

whom each must own ten shares of stock, and a majority of whom must 
reside in the county or adjacent counties. 

Before dividends are declared at least one-tenth of net profits must 
be carried to surplus until it equals twenty per cent, of the capital. The 
directors must hold regular monthly meetings. Two of these must be 
on the second Tuesdays in June and December, at winch thorough ex- 
aminations of the books and securities must be made, and a report on 
same filed, a copy being sent to the Public Examiner. 

Powers specified, in addition to ordinary corporate powers and bank- 
ing powers, to hold real and personal property committed to it on any 
terms or trust by any persons, corporations or courts, including married 
women and minors; to act as agent, attorney for the transaction of busi- 
ness, management of estates, etc. ; to act as fiscal agent, transfer agent, 
registrar; to act as executor, administrator, trustee, receiver or assignee, 
or as guardian (of the estate only) ; courts are authorized to make such 
appointments; except in the discretion of the court, no bond or security 
shall be required other than the deposit with the State Treasurer; to 
loan upon real and collateral security; to execute its notes and deben- 
tures and pledge its securities therefor; to do a safe deposit business. 
Aside from that held in trust it may hold such real estate only as is 
needed for the transaction of business and such as is acquired under 
judgments or in satisfaction of debts, and the latter may be counted as 
an asset not longer than five years. 

Such a corporation must keep on hand funds equal to twenty-five 
per cent, of matured obligations and money due and payable, three- 
fourths of which may be on deposit with banks or trust companies ap- 
proved by the Public Examiner. A trust company may not own stock 
of another trust company or corporation, and may not purchase or loan 
upon its own stock, except to prevent loss upon debts previously con- 
tracted. Stockholders are subject to double liability. A list of stock- 
holders and their stock holdings must be kept open to inspection of di- 
rectors, officers, stockholders and creditors during business hours. 

The word "trust" in titles may not be used except by corporations 
existing under this act. Joint deposits may be paid to either, whether 
the other be living or not. Banks are not liable on forged or raised 
checks unless notified within three months after vouchers are returned. 

Not less than five reports each year must be rendered to the Public 
Examiner, who has power to call for extra reports at his discretion. He 
must examine each company at least twice each year. 

(Laws of 1911, chapter 255. Compiled Laws, 1913, pp. 128za to 
134c.) 

Tennessee. 

Act 168 of the Acts of 1888 provides for the organization of banks, 
"said banks to be invested with authority, if the banking company or 
corporation so chooses, to couple with the ordinary business of banking a 



STATE AND TERRITORIAL LAWS. 461 

safe deposit and trust company." Such banks must have five or more 
directors. Their powers specified are: Ordinary banking; safe deposit 
business ; to guarantee the payment of bonds and mortgages ; to do a 
title insurance business, and "to accept and execute all trusts of every 
name and kind which may, with its consent, be imposed upon it by any 
person or corporation, whether the trust be that of guardian, executor, 
trustee, the committee of the estate of a non compos mentis, or any other 
trust, the said corporation being hereby invested with the power to act 
in such fiduciary capacity as fully as if the corporation were a person in 
being." Such corporation must be organized like other corporations, 
and must publish a statement in a local newspaper every six months. 
(Shannon's Code, 1896, §§ 2090-2105). 

Chapter 44, Acts of 1901, provides that trust companies must, in 
July and January of each year, or within thirty days thereafter, publish 
in a newspaper in the county a statement of financial condition as of 
June 30 and December 31, respectively, next preceding. The form of 
this statement is to be determined by the Comptroller of the State. 

Chapter 377, Acts of 1903, makes more detailed provisions regarding 
trust companies. Banks in counties of population from sixty to ninety 
thousand, organized for the purpose of conducting a savings, safe de- 
posit and trust banking business, with a capital of $100,000 or more, 
"may be appointed to accept and execute trusts and agencies of any kind 
and character whatsoever", to which they may be appointed by persons, 
corporations, public or private, or executor, administrator, guardian (of 
estates only, not of persons) of infants, idiots, lunatics and other persons 
of unsound mind, receiver, commissioner, assignee or trustee for any 
person, firm, association, etc., attorney in fact or agent for the transac- 
tion of any business, management or sale of any property whatsoever, 
"in the same manner and to the same extent as natural persons." The 
capital of such companies shall be taken as the security for faithful per- 
formance of duty required by law, and no other security need be re- 
quired, except in the discretion of the courts. Such corporations may 
act as depositaries for public funds and for funds in charge of persons 
acting in fiduciary capacities. 

Trust funds must not be included in the assets of the company. 
They may be invested in bonds of the United States, of Tennessee and 
the other States, first mortgage bonds of any railroad, bonds of any 
county or municipal corporation, provided such bonds be worth par or 
more and have regularly paid dividends of not less than four per centum 
for the five years preceding, or in first mortgages on real estate ap- 
praised at least twice the amount loaned thereon, such mortgages to run 
for not more than ten years. The designation of an attorney in a will, 
and the right of heirs to select an attorney must be recognized. When 
acting as guardian, such company need render statements only every two 
years, instead of yearly, as is required of natural persons so acting. 



462 TRUST COMPANIES. 

The fees which may be charged for services in certain fiduciary capaci- 
ties are specified in the statute. 

Banks and trust companies in counties having a certain population 
and having a paid up capital of $100,000 or more, may deposit with the 
State Treasurer $25,000 in United States or Tennessee State bonds, and 
thereupon assume the trust duties and trusts permitted by their 
charters. 

Under the general banking act of 1913 (Chapter 20, Acts of 1913), 
trust companies are included under the term "banks," and are subject 
to the provisions relating to all banks. They are subject to the super- 
vision of the Superintendent of Banks, who must examine each com- 
pany at least twice a year, and oftener if he deems it necessary, with- 
out giving previous notice. They must render to the Superintendent on 
his call, a report once each half-year, and these reports must be pub- 
lished in a local newspaper. Special reports may be called. 

The capital required of all banks, including trust companies, is at 
least $7,500 in towns of less than 1,500 inhabitants; $10,000 in towns 
of from 1,500 to 5,000; $12,000 in cities of from 5,000 to 20,000; 
$25,000 in cities of from 20,000 to 40,000; $35,000 in cities of from 
40,000 to 100,000; and $50,000 in larger cities. Existing banks may 
continue on present capital, but must devote earnings in excess of six 
per cent, for dividends to building up capital. The reserve required is 
ten per cent, of demand deposits, which may be on deposit with other 
banks. Loans may not be made to officers or employees except upon 
approval of the directors or finance committee. Loans to one person or 
interest may not exceed fifteen per cent, of the capital, surplus and 
profits, except upon approval of a majority of the executive or finance 
committee. Loans upon or the purchase of the company's own stock 
are prohibited, unless to prevent loss upon debts previously contracted, 
in which case the stock must be disposed of within six months. 

Texas. 

Five or more persons may incorporate a "banking and trust com- 
pany." Articles of agreement must be filed with the Secretary of State. 
The corporation may not continue more than fifty years. 

The law authorizes the establishment of banks of deposit or of dis- 
count, or both, having trust powers. The powers specified are: To ex- 
ercise the powers of banks of deposit and discount; to act as fiscal agent 
of corporations, public and private; to act as transfer agent and regis- 
trar; to receive deposits of trust moneys, securities or other personal 
property; to loan money on reel or personal securities; to hold such real 
estate as is needed in the transaction of the business, and such as is ac- 
quired in the satisfaction of debts due the company; but the latter may 
be retained not more than five years; to act as trustee under any mort- 
gage or bond issue, "and accept and execute any other municipal or 
corporate trust not inconsistent with the laws of this State"; to accept 



STATE AND TERRITORIAL LAWS. 463 

trusts for married women with respect to their separate property, and to 
act as agents in the management of same; to act under the appointment 
of court as guardian, receiver or trustee of the estate of any minor, the 
annual income of which shall not be less than $100; to act as depository 
of any moneys paid into court; to execute any legal trusts regarding the 
management of estates real or personal, from whatever source the trust 
may be received; to manage estates; "to purchase, invest in, guarantee 
and sell stocks, bills of exchange, bonds and mortgages and other se- 
curities"; to issue its own bonds and obligations; to act as executor, as 
administrator, as guardian of any infant, insane person, idiot or habit- 
ual drunkard, or as trustee for any convict in the penitentiary, under 
appointment of court. 

The capital shall be not less than 50,000 in towns or cities of less 
than 20,000 inhabitants, and not less than $100,000 in larger cities, nor 
more than $10,000,000. The affairs of the corporation shall be managed 
by a board of directors not less than five nor more than twenty-five in 
number; elected annually unless the number exceeds five, in which case 
they are to be divided into three classes so that each shall serve three 
years, one-third retiring each year. 

Banks and trust companies are under the supervision of the Commis- 
sioner of Banking and Insurance, who is required, through his exami- 
ners, to examine each company at least once in each quarter of each 
calendar year. 

Reports to the Commissioner, in a form prescribed in the statute 
and by the Commissioner, must be made upon his call at least twice 
each year, and oftener at his discretion. Such statements must be pub- 
lished in a local newspaper, and must be posted in the banking house. 

Trust companies may not loan to any one individual, company or 
corporation an amount greater than twenty-five per centum of the capital 
stock; or of the capital stock and surplus if the latter is equal to or in 
excess of fifty per centum of the capital. The discount of bills of ex- 
change drawn against actually existing values and the discount of paper 
upon the collateral security of warehouse receipts covering products in 
store under certain conditions, are not considered as money borrowed. 
Trust companies may not engage in trade or commerce. The directors 
may declare dividends, if earned, every six months or oftener, but must 
first set aside ten per centum of the net profits to a surplus fund, until 
the same amounts to fifty per centum of the capital. 

Funds in the charge of trust companies may be invested in loans se- 
cured by real estate or other sufficient collateral security, in public bonds 
of the United States or of this State, in the bonds of any incorporated 
city or county or independent school district in this State. Such cor- 
porations may own only such real estate as is required for the transac- 
tion of their business, and such as is acquired in the collection of debts; 
but the latter may not be retained more than five years. Stockholders 
are subject to double liability. The books and records of such corpora- 



464 TRUST COMPANIES. 

tions must be kept open for the inspection of all persons interested. 
Trust companies having a capital of at least $100,000, and making a 
deposit of $50,000 with the State Treasurer shall be permitted to qualify- 
as guardian, curator, executor, etc., without giving bond as such. Such 
deposit shall consist of cash, Treasury notes of the United States, or 
Government, State, county, municipal or other bond or bonds, notes or 
debentures, secured by first mortgages or deeds of trust, or mortgages or 
deeds of trust, or unincumbered real estate in the State worth at least 
double the amount loaned thereon, or such other first-class securities as 
the Superintendent of Banking may approve. This deposit shall be 
primarily liable for the obligations of such company acting in fiduciary 
capacities, "and shall not be liable for any other debt or obligation of 
the company until all trust liabilities have been discharged." 

Corporations not organized under this act are forbidden to 
use the words "trust" or "trust company" in their titles; except that 
corporations already organized and authorized to use such terms in their 
titles may retain same by using thereafter the words "without banking 
privileges." Foreign corporations, other than National banks, are for- 
bidden to do a business of banking and discount in this State. 

Every banking corporation is required to maintain a reserve of at 
least twenty-five per centum of the aggregate amount of its demand de- 
posits, ten per centum of which is to be actual cash in the bank. The 
reserve fund or any part thereof may be kept on hand or on demand de- 
posit in any bank or banking association in the State of Texas or in any 
bank, banking association or trust company in another State approved 
by the Superintendent of Banking and having a paid-up capital of 
$50,000 or more; but the deposits in any one bank or trust company shall 
not exceed twenty per centum of the total deposits, capital and surplus of 
said bank. 

Banks and trust companies maintaining or advertising a savings bank 
business or having the word "savings" as part of the corporate name, 
must maintain a separate savings department, whose assets and liabili- 
ties must be segregated from the other business of the company. This 
department must at all times maintain a reserve in actual cash of fifteen 
per cent, of its deposits. The remaining eighty-five per cent, may be 
invested in United States bonds, State bonds meeting certain require- 
ments, bonds of municipalities, counties, etc., in Texas meeting stated 
requirements, first mortgage bonds of steam and electric railroads in 
Texas having income sufficient to meet charges, and first mortgage 
bonds on real estate in the State worth double the amount loaned there- 
on. A monthly statement of the assets and liabilities of this department 
must be made to the Commissioner, and a copy of same must be con- 
spicuously posted in the banking office. 

Trust companies may at their option take advantage of the Bank 
Deposit Guaranty Law. Banks and trust companies may not loan upon 
their own stock, nor purchase same, except to prevent loss upon debts 



STATE AND TERRITORIAL LAWS. 465 

previousl} 7 contracted. They may not own more than ten per cent, of 
the capital stock of another bank or trust company, nor hold more than 
such amount of same as collateral. 

(Vernon's Sayles' Annotated Civil Statutes, 1914. Title 14, espe- 
cially articles 380-385, 431-444, 517a-574.) 

Utah. 

"Loan, trust and guaranty associations" may be incorporated by three 
or more persons in the same manner as other corporations for pecuniary 
profit. 

Powers specified: To do a title insurance business; to act as as- 
signees, agents, receivers, guardians of the estates of minors and incom- 
petent persons, to act as executors and administrators ; "to execute trusts 
of every description not inconsistent with law"; to become sole security 
in cases where by law one or more sureties may be required; "to buy, sell 
or mortgage real estate or personal property, to loan money on real es- 
tate security or otherwise, to sell and assign mortgages and endorse ne- 
gotiable instruments, and to make, execute and deliver bonds, promissory 
notes and bills of exchange" ; to receive deposits of money : provided that, 
if such associations shall receive commercial or savings deposits, the 
liability of stockholders and the restrictions concerning the lending of 
its funds shall be the same as those for commercial or Savings banks 
respectively; to act as security for the faithful performance of any 
contract; to do a fidelity insurance business; but nothing in this chapter 
shall be construed as dispensing with the approval of such association 
as security by the court, officer or individual charged by law with the 
duty of approving such security. When acting under fiduciary appoint- 
ments the capital of the corporation shall be held as security for the 
faithful performance of duty, and no bond for such purpose shall be 
required of it. The capital, paid up, must be at least $25,000, and in 
cities of the first class at least $100,000. The capital must be kept in 
money on hand, or on deposit in solvent banks, or invested in bonds of 
the United States or of this State, or of any county, municipality or 
school district thereof, or in first mortgages on real estate situated in 
Utah, worth at least twice the amount loaned thereon. Such corpora- 
tions are under the same provisions regarding reports and examinations 
as banking corporations. They must make to the Secretary of State, 
who is ex-officio Bank Commissioner, not less than four reports each 
year, and must be examined by him once a year or oftener. 

The reserve required of commercial banks is fifteen per cent, of de- 
mand deposits, unless the bank is located in a city of more than 50,000 
population, in which case the reserve required is twenty per cent. One- 
eighth of the reserve must be in cash. Savings banks must carry a re- 
serve of ten per cent, of deposits, of which one-fourth must be in cash. 
Companies doing both lines of business must carry reserves as above 
for each line of business. 



466 TRUST COMPANIES. 

Banks and trust companies are forbidden to maintain branches. 
Stockholders are subject to double liability. Minors may control their 
deposits. Joint deposits are payable to either, whether the other be liv- 
ing or not. The fraudulent issue of checks without sufficient funds to 
meet them, on deposit is a misdemeanor. 

(Statutes, Title 14, chapter 9. See also Laws of 1905, chapter 75; 
Laws of 1911, chapter 25; Laws of 1913, chapters 5, 16, 26.) 

Vermont. 

Trust companies are incorporated only by special acts of the Legis- 
lature. The general laws regarding such corporations have, however, 
been quite numerous. 

In 1910 the legislature of this State passed an act revising the laws 
relating to savings banks and trust companies, and the larger part of 
the act applies equally to both classes of banks. The investments per- 
mitted are detailed at great length, and include first mortgages on un- 
incumbered real estate, not to exceed in each case sixty per cent, of its 
value if located in Vermont, or fifty per cent, if located elsewhere; 
United States bonds and specified municipal bonds meeting certain re- 
quirements; bonds of Vermont railroads, New England railroads and of 
other railroads meeting requirements described at length in li,e acl ; 
stock of National banks in New England and in New York and si jcks 
of banks and trust companies in Vermont; deposits in banks and trust 
companies, approved by the Bank Commissioner, in Vermont and in 
other places specified; loans on personal security with at least two names 
and meeting certain requirements ; collateral loans secured by first mort- 
gages on real estate, by deposit books or certificates of deposit of cer- 
tain banks, or by the municipal and railroad bonds and bank stocks in 
which investment is authorized. Not more than one-third of the assets 
may be invested in loans on personal or collateral security. Loans to 
one person or interest may not exceed $10,000 until deposits amount to 
$1,000,000, after which they may increase one per cent, of deposits in 
excess of $1,000,000 up to $50,000, or not exceeding ten per cent, of 
capital and surplus. 

Five per cent of deposits may be invested in a bank building, or site 
and building. Real estate taken by foreclosure must be sold within five 
years. 

Savings banks and trust companies must make annual reports to the 
Bank Commissioner as of June 30 showing information detailed in the 
statute. The Commisioner must examine each company semi-annually, 
and if the company is in the same building as, or its treasurer is an officer 
of, a National bank, one of these examinations must be made at the 
same time a United States examiner visits the National bank. 

Deposits made by one person in trust for another, the bank having 
no further notice of the existence of a valid trust, may be paid to the 



STATE AND TERRITORIAL LAWS. 467 

person for whom the deposit was made, after the death of the trustee. 
Minors may control their deposits. The treasurer of each bank is re- 
quired to report to the Bank Commissioner every sixth year, beginning 
in 1912, a list of accounts inactive for ten years previous, excluding ac- 
counts under $25, and names of persons known by the bank officers to 
be living. Every fifth year, beginning 1913, deposit books must be 
called in and examined by an outside person approved by the Bank 
Commissioner. 

The reserve required is fifteen per cent, of commercial deposits and 
three per cent, of savings deposits. Two-fifths may be in bonds of the 
United States, of a State or of a city in the United States having a pop- 
ulation of at least 200,000. The remaining three-fifths must be in cash 
or in balances due from banks which are authorized depositories; one- 
third of this must be in cash, but one-half of such cash requirement may 
be on demand deposit in banks within the county. 

The treasurer of a bank or trust company must be under a bond 
which must be deposited with the Bank Commissioner. The directors 
must meet at least once a month. At least once every six months they 
must examine the company by a committee of their members. 

Before paying dividends, a trust company must set aside an amount 
not less than one-fourth of one per cent, per annum on average deposits, 
to build up a surplus fund until such fund plus the paid capital equals ten 
per cent, of the deposits and other liabilities except surplus, capital and 
funds held in a fiduciary capacity. Until one-half of a surplus fund of 
such amount is established interest paid on deposits may not exceed one 
and three-fourths per cent, semi-annually: it may then be not to exceed 
two per cent, semi-annually until the fund is complete. 

No loans may be made to officers, directors or employees of trust 
companies without written consent of a majority of the directors. Such 
a loan may not exceed five per cent, of the paid capital, bona fide dis- 
counts not exceeding $10,000 or authorized collateral loans not exceed- 
ing $10,000 excepted. Stockholders are subject to double liability. 

A trust company may act as executor, administrator, receiver, assig- 
nee or guardian of a person subject to guardianship under the same 
conditions as a qualified natural person. No surety shall be required 
except at discretion of the court. 

Property received on such trusts must be segregated from the gen- 
eral business of the company. The directors may at their option accu- 
mulate a trust guaranty fund from profits not required for the surplus 
fund. 

The powers, privileges, duties and restrictions of all trust company 
charters are abridged or enlarged to conform to provisions of this act. 

Banks and trust companies are authorized, at their discretion, to pay 
to a minor his deposits. Such corporations in figuring surplus must esti- 
mate interest or dividend-paying stocks and bonds, and real estate, at 
market value, and mortgages at face value and accrued interest. None 



468 TRUST COMPANIES. 

but corporations reporting to and under the supervision of the Bank 
Commissioner may use the word "trust" in titles. 

(Acts of 1910, Nos. 157, 158, 159. Acts of 1912, Nos. 167, 168. 
Acts of 1914 not examined.) 

Virginia. 

Trust companies in this State were incorporated only by special acts 
of the Legislature, until the passage in 1914 of a general act providing 
for their incorporation. During recent years they have been made sub- 
ject to the general laws relating to banks of deposit and discount and 
of savings banks, by which laws they are now governed, except as to 
special provisions in the laws relating specifically to trust companies. 

Under the act approved March 27, 1911, companies may be incor- 
porated to do a trust business or a banking and trust business. The 
character of business to be done must be specified, and the word "trust" 
or "trusts" must form part of the title. The capital must be not less 
than $100,000. 

Such a company has the powers, duties and restrictions of banks of 
deposit and discount and of savings banks, except as otherwise specified 
in the act. The special powers are, to act as fiscal agent for any per- 
son, corporation, municipality or State; to act as transfer agent, agent 
for any lawful purpose, trustee under bond issues, "and to execute any 
other municipal or corporate trust not inconsistent with the laws of this 
State"; to execute trusts for married women and act as agent in the 
management of their property; to act as guardian, receiver or trustee of 
the estate of any minor ; to act as depositary of funds ; to accept and 
execute legal trusts of any nature entrusted to it by courts, persons, cor- 
porations or other authority: to act as executor, administrator, guardian 
of any infant, committee of the estate of the insane, idiots, drunkards 
or convicts in the penitentiary, under appointment of court; to do a 
fidelity insurance business. If the unimpaired capital amounts to $100,- 
000, such a company is not required to give security on acceptance of a 
trust. 

Banks and trust companies are under the supervision of the State 
Corporation Commission, from whom a certificate must be obtained be- 
fore commencing business. Reports to the Commission, in the form pre- 
scribed by it, must be made at the times of the calls for statements from 
National banks, and at such other times as the Commission may deem 
necessary. The Commission must examine each company at least once 
a year. 

Loans to one person or interest may not exceed twenty-five per cent, 
of capital and surplus, bona fide discounts excepted, unless authorized by 
the directors. Certified checks must be charged at once. Checks of 
drunken persons may be refused. Only corporations subject to the State 
Corporation Commission may use the word "trust" in titles. Branch of- 
fices may be maintained only on permission of the Commission. 



STATE AND TERRITORIAL LAWS. 469 

Joint deposits may be paid to either, whether the other be living or 
not. The fraudulent issue of checks without sufficient funds on deposits, 
constitutes larceny. The capital stock of banks and trust companies is 
not subject to taxation, but stockholders are taxable on their shares. 

(Pollard's Code of Virginia, sections 1154-1184. See also acts of 
March 16, 1910, January 30, 1912, March 13, 1912, March 14, 1912. 
Acts of 1913, chapters 27 and 310.) 



Washington. 

Seven or more persons may incorporate a trust company. The name 
of the company must contain the word "trust/' and other corporations 
are forbidden to use the word in their titles. Capital required: $25,000 
in towns or cities of less than 10,000 inhabitants, $50,000 in cities of 
from 10,000 to 25,000 inhabitants, and $100,000 in larger cities. Stock- 
holders are subject to double liability. 

The holding of real estate is limited in practically the same way as 
that of National banks. Such as is not needed for the business may not 
be held as an asset over three years. Before declaring dividends, one- 
tenth of the net profits must be carried to surplus until the latter equals 
20 per centum of the capital. Checks may not be certified unless the nec- 
essary funds are on deposit. Trust companies must carry a reserve of 20 
per centum of demand liabilities. Payment on joint accounts may 
be made to either party, whether the other is alive or not. In 
December of each year a report must be made of all deposits that have 
been unclaimed for ten years, unless the Secretary or Cashier knows the 
depositor to be living. 

Powers specified: to act as fiscal or transfer agent or registrar, and 
as agent for any corporation, foreign or domestic, for any purpose re- 
quired by statute or otherwise; to receive deposits of trust moneys, se- 
curities and other personal property from persons or corporations; to 
loan money on real or personal securities; to discount and negotiate 
promissory notes, drafts, bills of exchange and other evidences of debt; 
to buy, sell and exchange coin and bullion; to hold all real estate neces- 
sary for, and convenient in, the transaction of its business, or which the 
purposes of the corporation may require, and such as is required in 
satisfaction of debts due to it; to act as trustee under mortgages and 
bond issues, "and to accept and execute any other municipal or corporate 
trust not inconsistent with the laws of this State"; to execute trusts for 
married women in respect to their separate property, and to act as agent 
in the management of same or in business relative thereto; to act as 
guardian, receiver or trustee of the estate of any minor, and as depositary 
of any moneys paid into court; to execute any legal trusts and powers 
regarding the management of any estate, real or personal, confided to it 
by any court of record, person, corporation, municipality or other author- 
ity, and to hold property that may be the subject of any such trust; to 



470 TRUST COMPANIES. 

purchase, invest in and sell stocks, promissory notes, bills of exchange, 
bonds, debentures and mortgages and other securities; to issue its bonds 
or obligations for money borrowed or received on deposit or for invest- 
ment; to act as assignee or trustee under an assignment, or as receiver; 
to act as executor, trustee under will, administrator, or guardian of the 
estate of lunatics, idiots, persons of unsound mind and habitual drunk- 
ards; to do a safe deposit business; to do a title insurance business, but 
not if the company does a banking business; to collect income on securi- 
ties as agent; to receive and manage a sinking fund for any corporation; 
"generally to execute trusts of every description not inconsistent with 
the laws of this State or of the United States"; to receive money on de- 
posit, subject to check or otherwise, with or without interest. 

It is specially provided that no trust company "which advertises that 
it will furnish legal advice, construct papers and prepare wills or do 
other legal work for its customers shall be permitted to act in the ca- 
pacity as executor, trustee, assignee or otherwise serve in any fiduciary 
capacity." 

The affairs of every such corporation shall be managed by a board 
of directors, not less than three in number, each of whom must own five 
shares of stock. Trust companies may not loan to their officers, stock- 
holders or employees from trust funds, and any loans to them must first 
be approved by a majority of the directors and be entered on the rec- 
ords. Directors who knowingly permit a violation of this are individually 
liable for damages. Trust companies may not loan on the security of their 
own stock, nor purchase same except to prevent loss on a debt previously 
contracted in good faith. They must make to the State Examiner not 
less than three reports each year, according to forms which may be 
prescribed by him; such reports to be rendered as of past day specified 
by the Examiner, which days shall correspond with those on which 
national bank statements are called for. An abstract of the reports 
must be published in a local newspaper. The Examiner may call for 
special reports at his discretion. Trust companies are subject to the 
inspection and supervision of the State Examiner, and it is his duty to 
examine them at least once a year without previous notice. Deposits 
made by minors and married women are subject to their control. 
There appears to be some conflict between the laws relating specifically 
to trust companies and those relating to banks; but under section 3316 
of the Code, all companies which receive money on deposit are made 
subject to the banking law, 

(Remington and Ballinger's Annotated Codes and Statutes, 1910, 
Title XVIII, sections 3290-3368. Laws of 1911, P. 1, P. 500. Laws 
of 1913, chapters 9, 22, 147, 177.) 

West Virginia. 

Trust companies are organized according to provisions of the general 
incorporation laws, and governed by the provisions of the "Title and 
Trust Company" law. 



STATE AND TERRITORIAL LAWS. 471 

Powers specified: To do a title insurance business; to buy, sell, hold 
and guarantee bonds, stocks, loans and evidences of indebtedness, and to 
make and execute contracts and agreements required therefor; to engage 
in a general banking business, with all the incidental powers necessary 
thereto; as to such banking business, trust companies are subject to the 
banking laws, except that there shall be no limit to the maximum of 
paid-up capital that such companies may have; to do a safe deposit 
business; to act as trustee, assignee, receiver (general or special), guard- 
ian, executor, administrator, special commissioner, committee or curator; 
to execute trusts of every description not inconsistent with the constitu- 
tion of this State or of the United States; to receive deposits of money 
or other personal property, and issue its obligations therefor; to invest 
its funds in and to purchase real and personal securities, and to loan 
money on real and personal securities; to act as fiscal or transfer agent 
or registrar; to purchase and sell or take charge of real estate for other 
persons, firms or corporations; for the purpose of indemnifying and 
saving harmless any company for making any loans, or accommodations, 
such company is authorized to receive and hold on deposit and in trust, 
as security, estates, real and personal, including the notes, bonds and 
obligations of States, counties or municipal corporations, individuals, 
firms or corporations, and the same to purchase, collect and adjust, set- 
tle and dispose of, in case of default upon any note or obligation for 
which such property has been received as indemnity, or as collateral 
security, without proceedings at law or in equity. Courts appointing 
such companies to trusts may, in their discretion, on the application of 
any persons interested, investigate the affairs of trust companies so ap- 
pointed. Trust funds and investments must be kept separate from the 
assets of the company, and all investments made by the company as 
fiduciary must be so designated as to show to what trusts they belong. 
The capital of such companies shall be taken and considered as the 
sole security required by law for the faithful performance of duties in 
trust capacities ; provided, that, where the liability of the company in 
any trust capacity equals or exceeds the capital and surplus, the court 
making such appointment, or order or decree, shall require additional 
security. 

The capital of such companies must be at least $100,000 fully paid. 
Such companies shall not act as surety on bonds, or do a fidelity insur- 
ance business, except as above specified. 

Institutions not regularly organized and chartered as trust companies 
are forbidden to use in connection with their business the term "trust 
company." Stockholders are subject to double liability. Every director 
must absolutely own at least five shares of stock. Trust companies are 
specifically made subject to the banking laws. They may not begin 
business until they have obtained a certificate of authority from the 
Commissioner of Banking. The Commissioner must make a thorough 
examination of each company at least once a year. Loans may not be 



472 TRUST COMPANIES. 

made upon the security of the company's own stock to an amount in 
excess of fifty per centum of the capital, nor may such stock be purchased 
or held except to prevent loss upon debts previously contracted in good 
faith; and in the latter case the stock must be sold within six months. 
Loans to one party, except bona fide discounts, may not exceed twenty 
per centum of the capital. Before the declaration of a dividend one-tenth 
of the net profits must be carried to surplus until the latter equals twenty 
per centum of the capital. Lists of stockholders with their addresses and 
holdings must be kept, which shall be open to inspection during business 
hours by all stockholders, creditors and by the State tax authorities. A 
copy of this list shall be forwarded to the Commissioner on the first 
Monday of July of each year. All companies are required to maintain 
a reserve of fifteen per centum of all deposits subject to withdrawal on 
demand, of which three-fifths may consist of balances payable on de- 
mand due from any national or State bank (including trust companies) 
in the State or any solvent banks outside the State that may be approved 
by the supervisor in said State. 

Reports to the Commissioner of Banking must be made at least four 
times a year, "corresponding as to time as nearly as possible to the calls 
made by the Comptroller of the Currency," according to forms pre- 
scribed by him, and such reports must be published in local papers. 
Special reports may be called for and special examinations may be made 
by the Commissioner at his discretion. 

Foreign trust companies may do business in the State by complying 
with certain regulations and getting a certificate of authority from the 
Commissioner. 

(Hogg's West Virginia Code, 1914, chapter 54c, sections 3176-3195.) 

Wisconsin. 

Five or more persons may incorporate a "trust company bank." Cap- 
ital required, not less than $50,000 in cities of less than 100,000 popula- 
tion, and not less than $100,000 in larger cities. Maximum limit, $5,- 
000,000. Before beginning business, such companies shall deposit with 
the State Treasurer not less than fifty per centum of the 
capital nor more than $100,000 in amount. Such deposit shall 
be in cash, bonds or mortgages, or notes and mortgages on 
unincumbered real estate within this State worth double the 
amount secured thereby, or public stocks and bonds of the United 
States or of any State of the United States that has not default- 
ed on its principal or interest within ten years, or of any county, 
town, village or city in this State, and upon all which bonds and other 
securities there shall have been no default in the payment of interest or 
principal for a longer period than thirty days. The securities must be 
approved by the Commissioner of Banking. This deposit shall be held 
as security for the faithful performance of the trusts undertaken by it. 
Other securities may be substituted from time to time; and the company 



STATE AND TERRITORIAL LAWS. 473 

shall receive the income of the securities. Such companies shall be man- 
aged by a board of three or more directors, all of whom must own stock, 
and must be residents of the State. 

Their specified powers are, in addition to ordinary corporate powers: 
To receive, hold or dispose of any property, real or personal, con- 
veyed to them upon any trust, by any persons, including married 
women, minors, bodies corporate or any court, and to execute any 
trusts regarding same; to act as agents for the transaction of busi- 
ness, management of estates, collection of income or principal, etc. ; 
to act as registrar, fiscal or transfer agent; to act as executor, ad- 
ministrator, trustee, receiver, assignee, guardian of minors, persons 
insane or incompetent, lunatics, or any persons subject to guardianship; 
courts are authorized to make such appointments; no security shall be 
required of the company other than the deposit with the State, except 
in the discretion of the court; to do a safe deposit business; to loan upon 
unincumbered real estate situated in Wisconsin, Michigan, Illinois, Iowa 
and Minnesota, and upon "securities other than personal notes or com- 
mercial paper or obligations secured solely thereby" ; to receive time de- 
posits and issue its notes, certificates, debentures and other obligations 
therefor, payable at a future date only, not earlier than thirty days from 
the date of such deposit; such deposits must be held and invested sep- 
arately from other funds, and be primarily liable for the payment of 
such deposits. Trust companies "shall not receive deposits subject to 
draft, order or check, or payable upon demand, issue bills to circulate as 
money, or deal in bank exchange." 

Trust companies may hold real estate necessary to carry on their 
business, and to execute trusts committed to them and such as may be 
necessary in the enforcement of claims, etc. They must maintain a re- 
serve of fifteen per cent, of deposits, in lawful money or on deposit with 
banks approved by the Commissioner. Trust accounts must be kept in 
separate books, and trust assets must be segregated and so marked as to 
be readily identified. Loans may not be made to, nor overdrafts permit- 
ted by any salaried officer or employee. Trust companies may not main- 
tain branches. The word "trust" must form part of the name of every 
trust company, and is prohibited in titles to others ; the word "bank" 
must not be used as part of the name of a trust company. 

Trust companies are under the supervision of the Commissioner of 
Banking, to whom they must make not less than five reports each year, 
on his call, and such reports must be published in a local newspaper. 
They must also render to him on his call once a year, a list of stock- 
holders with their residences and stock holdings. He must examine each 
company at least twice a year. With some exceptions, specified in the 
statute, trust companies are subject to the laws governing State banks. 
The directors are required to appoint an examining committee to examine 
the company once every six months. A bank or trust company may not 
loan on its own stock, not purchase same except to prevent loss on a 
debt previously contracted. It may not loan on the stock of another 

31 



474 TRUST COMPANIES. 

bank unless it has for two years or more earned and paid a dividend, 
and in any event may not hold more than ten per cent, of the capital of 
another bank as collateral. It may not loan to its own directors, officers 
or employees without a responsible endorser or sufficient collateral secu- 
rity, unless by resolution of the directors. It may not certify a check 
unless funds are on hand to cover same. Before declaring a dividend 
it must carry one-tenth of net earnings to surplus until it equals twenty 
per cent, of the capital. Stockholders are subject to double liability. 
Minors and married women may control their deposits. A deposit in 
trust for another, no further notice of the existence of a valid trust be- 
ing given the company, may be paid to the person for whom the deposit 
was made. Joint deposits may be paid to either, whether the other be 
living or not. 

(Laws of 1905, chapter 504; Laws of 1909, chapter 94; Laws of 
1913, chapters 546, 675, 721, 749, 764, 772.) 

Wyoming. 

Loan and trust companies may be incorporated by five or more per- 
sons. The capital, which "must be subscribed for as full-paid stock," 
must be at least $10,000 in towns of less than 2,000 inhabitants; at least 
$25,000 in towns from 2,000 to 4,000 inhabitants; at least $50,000 in 
towns of from 4,000 to 6,000 inhabitants; and at least $100,000 in cities 
of over 6,000 inhabitants. Fifty per centum of the capital must be paid 
in before commencing business, and the balance within six months. The 
shares must be $100 each. 

Powers specified: to exercise the ordinary powers of corporations; to 
buy, sell and discount bills of exchange, notes and all other evidences 
of debt, buy and sell gold and silver coin and bullion, receive deposits 
and pay out same either upon order or check; to "execute any trusts 
which may be created by instruments in writing; such instrument may 
appoint such association trustee for any lawful purpose, and to act as 
such trustee in all matters embraced in such trust;'"' to do a safe deposit 
business; to collect income of securities left for safe keeping; to execute 
and issue in the transaction of its business all necessary receipts, bonds 
and contracts. Such companies may hold such real estate as is necessary 
to carry on their business, as well as such as is acquired in the settle- 
ment of claims. The board of directors is authorized to invest the capi- 
tal and such monej 7 " as is received from persons or associations for in- 
vestment, "in good securities; and it shall be lawful for such association 
to make investments of its capital and of funds accumulated by its busi- 
ness, and moneys received from other persons and associations, for in- 
vestment as aforesaid, or any part thereof, in bonds and mortgages on 
unincumbered real estate and chattel property worth at least double the 
amount loaned, and also in any and all warrants and bonds of this State 
or any other State or Territory or of the United States, or the bonds 



STATE AND TERRITORIAL LAWS. 475 

and warrants of any county, city, town, or school district of this State 
legally authorized to issue such warrants or bonds." 

Such companies must maintain a reserve of twenty-five per centum 
of their liabilities to depositors, which reserve shall consist of cash on 
hand or on demand deposit with State or National banks approved by 
the State Examiner as reserve agents. Such a corporation may mortgage 
its real or personal property and pledge or hypothecate its notes, mort- 
gages and other securities, and guarantee payment of the same, to per- 
sons or corporations furnishing it money. Stockholders are subject to 
double liability. A section of the statutes which forbade such companies 
to receive deposits subject to check, and to buy commercial paper, etc., 
was repealed in 1903. 

Deposits made by one person in trust for another, the company hav- 
ing no further notice of the existence of a valid trust, may be paid to 
the person for whom the deposit was made, upon death of the trustee. 
Joint deposits are payable to either, whether the other be living or not. 
The circulation of false and derogatory statements regarding banks and 
trust companies is a misdemeanor. 

(Compiled Statutes, 1910, chapter 29G, sections 4025-1078. Laws of 
1911, chapters 34, 35, 42, 79.) 



BIBLIOGRAPHY. 



BOOKS AND PAMPHLETS RELATING DIRECTLY TO TRUST 

COMPANIES. 

Comparative Statements of Trust Companies in the State of New 
York, 1894-1904. New York: George W. Young & Co., 1905. pp 81. 
Digest of Laws Relating to Trust Companies of the United States. 
New York: George W. Young & Co., 1905. pp 98. 

A classified digest of State laws relating to trust companies. 
Modern Trust Company, The. F. B. Kirkbride and J. E. Sterrett 
New York: The MacMillan Co., 1905. pp 309. 

Up to the present this is the only general work on the subject 
published. Contains discussions of functions, methods of organiza- 
tion, duties of officers and employees, methods of accounting, depart- 
ments of work, Stock Exchange rules, bibliography. Illustrated 
with forms. 
Pennsylvania Company for Insurance on Lives and Granting 
Annuities, A Sketch of the. Philadelphia: J. B. Lippincott Co., 
1896. pp 168. 

An historical and descriptive sketch of the oldest company in the 
United States now doing a trust business. 
Trust Companies in the United States. George Cator. Baltimore: 
The Johns Hopkins Press, 1902. pp 113. 

One of the Johns Hopkins University Studies, and intended to 
give "a general outline of the subject". Contains historical sketches, 
discussions of functions, causes of development, State regulation, 
schedules of State laws. 

Trust Companies of the United States. New York: Published an- 
nually (since 1903) by The United States Mortgage and Trust. Co. 

Contains individual statistics of trust companies in the United 
States, Canada and Cuba. Gives for each company the statement 
of assets and liabilities, date of organization, quotations of stock, 
dividends, list of officers and directors. 

Trust Company Idea and Its Development) The. Ernest Heaton. 
Buffalo: The White-Evans-Penfold Co., 1904. pp 45. 

Discusses the growth of the trust company idea, advantages and 
functions of trust companies, sketches of the progress of trust com- 
panies in the United States, Canada, . Australia and other countries. 

Trust Company Question, The. Breckenridge Jones. St. Louis: The 
Mississippi Valley Trust Co., 1892. pp 24. 

477 



478 TRUST COMPANIES. 

This was the first published pamphlet on the subject, and has not 

been excelled for a clear statement of the functions and advantages 

of the trust company, and of the differences between banks and trust 

companies. 

The Circulars Published by Various Trust Companies furnish a good 

source of general information regarding the functions they exercise 

and the advantages they offer. 

PROCEEDINGS, REPORTS AND PERIODICALS. 

Bankers Magazine, The. New York. Published monthly. $5.00 a year. 
Has a Trust Company Department, and contains numerous notes 
and articles regarding trust companies. Publishes annually the pro- 
ceedings of the Trust Company Section of The American Bankers 
Association. For an historical study of the subject, the files of this 
magazine, which run back to 1846, are valuable. 
Banking Law Journal, The. New York. Published monthly. $4.00 
a year. 

Has a Savings and Trust Department, gives legal decisions affect- 
ing banks and trust companies, with discussions of same. 

Banking Periodicals. In addition to those named here, most banking 

periodicals contain occasional articles relating to trust companies. 
Bulletin of the American Institute of Banking. New York. Pub- 
lished monthly. $2.00 a year. 

Frequently contains articles on trust companies. 

Commercial and Financial Chronicle, The. New York. Published 
weekly. $10.00 a year. 

Contains occasional articles on trust companies, and weekly gives 
news items regarding same. Publishes annually the proceedings of 
The Trust Company Section of The American Bankers' Association. 
Gocd for statistics of New York trust companies. 

Comptroller of the Currency, Reports of the. Washington. Pub- 
lished annually. 

Beginning with 1875, these reports contain statistics of "Loan and 
Trust Companies", and frequently contain general information and 
discussions regarding same. Each report gives a resume of the 
statistics for the previous years. 
Forms Compiled Under the Supervision of the Trust Company 
Section of the American Bankers Association. New York: Pub- 
lished by the Association, 1903. pp 30. 

Contains about forty forms for the use of trust companies. The 
selections were good, but some of the forms have since been ma- 
terially improved upon. The Section now keeps at its office (5 
Nassau St., New York), a collection of forms contributed by its 
members. 



BIBLIOGRAPHY. 479 

Law Society, The: Proceedings Twenty-Ninth Provincial Meeting, 
1903. London. England. 

Contains, pp 234 to 264, a paper on Trustee Companies by 
Robert C. Nesbitt. Describes the trustee companies of Australia 
and the Public Trust Office of New Zealand, and discusses somewhat 
analogous institutions in England. 

New Zealand Official Year Book, 1898. Pages 454-462 contain a 
discussion of the Public Trust Office, with statistics. 

New Zealand, Statistics of the Colony of, 1903. Gives statistics of 
the Public Trust Office, 1886-1904. 

Printed Forms. Published by The Savings Bank Section of The Ameri- 
can Bankers' Association. New York, 1906. 

A book of forms used by savings banks, taken from samples sub- 
mitted and used by members. Contains about 600 forms, arranged 
under the following headings : — Deposits, Withdrawals, Signature 
and Index Cards, Bond and Mortgage Loans, Depositor's Ledgers, 
Loans, Miscellaneous Notices and Advices, Passbooks. 

Safe Deposit Companies, The Legal Rights and Duties of. A 
pamphlet containing the reports of special committees of 1904 and 
1905 of The Trust Company Section of The American Bankers 
Association. Published by the Association, New York, 1905, Be- 
sides discussion of the matters indicated by its title, the work 
includes practical suggestions as to rules and other matters, and 
some thirty forms. 

Savings Bank Section of the American Bankers Association, Pro- 
ceedings of the. Published annually by the Association, New York. 
Contain much that is useful for the savings departments of trust 
companies.. 

State Bankers' Associations, Proceedings of. These often contain 
papers regarding trust companies. They are usually published in 
local banking periodicals. 

State Banking Departments, Reports of. In States which are strong 
in trust companies, these reports often contain instructive matter, in 
addition to statistics. Those of New York are especially useful. See 
also those of Massachusetts and Pennsylvania. 

Trust Companies. New York. Published monthly. $3.00 a year. 

A magazine published monthly since March, 1904, devoted ex- 
clusively to trust company matters. Contains leading articles on 
various subjects of interest to trust companies, with news items. 
There are many valuable articles in its files. 
Trust Company Section of the American Bankers' Association, Pro- 
ceedings of the. Published annually since 1896 by the Association^ 
New York. 

Contains the valuable papers and addresses delivered at the meet- 
ings, with stenographic reports of the discussions, lists of officers 



480 TRUST COMPANIES. 

and members. The proceedings for the years 1896-1903, inclusive, 
have been published under one cover. 

Trust Company Section, Pennsylvania Bankers' Association, Pro- 
ceedings of the. 

These are included in the Proceedings of the annual meetings of 
The Pennsylvania Bankers' Association since 1901. 

ARTICLES IN PERIODICALS. 

(NOTE. — With a few exceptions, this list does not include articles in the peri- 
odicals named in the preceding list, for which their indexes should be consulted. 
An exception is made of the Bulletin of The American Institute of Banking [re- 
ferred to below as Bulletin], because it does not publish an index.) 

Advantages of Trust Companies, The. W. C. Miller. Bulletin, Oct. 
15, 1905, p 550. 

Australian Trust Companies. C. E. Cowdery. Trust Companies, Vol. 

II, p 676. 
Banks, The, and the Trust Companies. The Nation, Vol. LXXIV, 

pp 362-3, May 8, 1902; Vol. LXXXII, p 132, Feb. 15, 1906. 

(Editorials.) 

Bonds as Investment Securities. Annals of The American Academy 
of Political and Social Science, Vol. XXX, pp 193-427. 

A group of papers under the following headings: — The Proper 
Basis for Bond Accounts When Held for Investment, by Charles 
E. Sprague; The Valuation of Bonds on an Income Basis, by Charles 
E. Sprague; Bond Redemption and Sinking Funds, by C. M. Keys; 
The Value of a Bond Department to a Bank or Trust Company, by 
George B. Caldwell ; Tables of Bond Values — Theory and Use, by 
Montgomery Rollins ; Essential Recitals in the Various Kinds of 
Bonds, by Andrew Squire ; Organization and Management of a Bond 
House, by William Foley; Bond Salesmanship, by William Foley; 
Selling American Bonds in Europe, by Charles F. Speare; Methods 
of Accounting and Auditing in a Bond House, by Charles S. Ludlam; 
Bonds as Additional Banking Reserve, by William C. Cornwell; 
Railroad Bonds as an Investment Security, by Floyd W. Mundy; 
Electric Interurban Railway Bonds as Investments, by Edgar Van 
Deusen; Real Estate Bonds as an Investment Security, by George 
A. Hurd; Industrial Bonds as an Investment, by Lyman Spitzer; 
The Physical Condition of a Municipality Issuing Bonds, by Harry 
E. Weil; Municipal Bond Issues Explained, by Harry E. Weil; 
Protection of Municipal Bonds, by Park Terrell; Classification and 
Description of Bonds, by F. A. Cleveland; Bonds in Their Relation 
to Corporation Finance, by F. A. Cleveland. 

Control and Supervision of Trust Companies, The. Frederick D. 
Kilburn. Annals of the American Academy of Political and Social 
Science, Vol. XXIV, pp 27-42. July, 1904. 



BIBLIOGRAPHY. 481 

Definition and History of Trust Companies, The. Clay Herrick. 
Banking Law Journal, Vol. XX, p 329. (May, 1903.) Same 
article, Bulletin, July 1, 1903, p 8. 

Details of a Trust Company's Business, A Few. Walter P. McComas. 
Bulletin, May 15, 1903, p 8. 

Federal Supervision of Trust Companies. David R. Carson. Bulletin, 
Sept. 15, 1905, p 424. 

Government Control of Banks and Trust Companies. William Bar- 
rett Ridgely. Annals of the American Academy of Political and 
Social Science, Vol. XXIV, pp 15-26. July, 1904. 

Growth of Trust Companies. Alfred M. Barrett. Bulletin, January, 
1906, p 25. 

Growth of Trust Companies. Charles A. Conant. American Review 
of Reviews, Vol. XXVI, p 574. November, 1902. (Reprinted in 
Conant's "Wall Street and The Country.") 

Growth, Remarkable, of American Banks and Trust Companies. 
S. S. Pratt. Independent, Vol. LIX, pp 1454-67. Dec. 21, 1905. 

How a Trust Company Makes Its Money. T. W. Lament. Bulletin, 
May 15, 1905, p 1327. 

Illinois Trust Companies. W. E. Miller. Bulletin, Sept. 1, 1904, p. 

377. 
Joint Account, Legal Aspects of Payment to Survivor of. Thomas 

B. Paton. Proceedings Savings Bank Section of the American 

Bankers' Association, 1906. 

Knickerbocker Trust Co. Suspension. See "UNLOCKING $47,000,- 
000." Harper's Weekly, Vol. LII, pp 8-9, April 11, 1908. 

Legal Responsibilities of Trustees Under Corporation Bonds and 
Mortgages or Deeds of Trust. Robert Ludlow Fowler. American 
Law Review, Vol. XXIV, pp 703-726. 

Modern Trust Company, A. W. F. Mackay. Bulletin, Dec. 1, 1904, 
p 693. 

Nature and the Field of Trust Companies, The. World's Work, 
August, 1902, Vol. IV, pp 2463-5. 

Public's Stake in the Trust Companies, The. World's Work, June, 
1905, Vol. X, pp 6237-9. 

Public Trustee, The. Henry D. Lloyd. Current Literature, Vol. 
XXIX, pp 671-2. December, 1900. (Subdivision of article on 
Some New Zealand Experiments.) 

Public Trustee, The. E. K. Allen. Nineteenth Century, Vol. LXIII, 
pp 297-304. February, 1908. 

Public Trustee, Some Comments on the. William Schooling. Nine- 
teenth Century, Vol. LXIII, pp 465-475. March, 1908. 



482 TRUST COMPANIES. 

Relation of Trust Companies to Banks, The. J. Barton Townsend. 
Bulletin, Sept. 1, 1904, p 873.. 

Relation of Trust Companies to Industrial Combinations, as Illus- 
trated by The United States Shipbuilding Co. L. Walter 
Sammis. Annals of the American Academy of Political and Social 
Science, Vol. XXIV, pp 239-370. July, 1904. 

Reserves of Trust Companies. Festus J. Wade. Bulletin, Oct. 15, 
1904, p 521. 

Safeguarding the Trust Companies. C. M. Keys. World's Work, 

February, 1908, Vol. XV, pp 9907-9912. 
Stock Transfers. James S. Carr. Bulletin, April 1, 1903, p 10. 

Supervision of Trust Companies. World's Work, November, 1904, Vol. 
IX, pp 5457-8. 

Title Insurance. J. Smith Christy. Bulletin, June 1, 1905, p 23. 

Trust Accounts in Savings Banks. William Hanhart. Proceedings 
Savings Bank Section of the American Bankers' Association, 1903. 

Trust and Title Insurance Companies. Thomas Learning, Lippin- 
cott's Magazine, Vol. XLII, pp 886-893, December, 1888. (An 
early view.) 

Trust Companies. W. F, Mackay. Bulletin, Aug. 1, 1905, p 266. 

Trust Companies: Is There Danger in the System? A. D. Noyes. 

Political Science Quarterly, Vol. XVI, pp 248-261. June, 1901. 
Trust Companies. Chas. E. Willock. Bulletin, March 1, 1903, p 7. 

Trust Companies. Gay Morrison Walker. A pamphlet published by 
Moore, Baker & Co., Boston, 1903. Contains a discussion of the 
earning power of trust companies, and reasons for their growth. 

Trust Companies and the Clearing House. Horace White. The 
Nation, Feb. 12, 1903, Vol. LXXVI, p 126. 

Trust Companies and the Panic. William Justus Boies. American 
Review of Reviews, December, 1907, Vol. XXXVI, pp 680-83. 

Trust Companies and Reserves. A. S, Frissell. Annals of the Ameri- 
can Academy of Political and Social Science, Vol. XXXI, p 463. 

Trust Companies and Their Functions. Samuel M. Hahn. Bulletin, 
July 1, 1902, p 10; July, 15, 1902, p 11. 

Trust Companies: Their Organization, Growth and Management. 
Clay Herrick. Bankers Magazine, 1904-1907, incl. Vols. LXVIII- 
LXXV. 

Trust Company Association of the State of New York, The. The 
Banking Law Journal, Vol. XXI, pp 419-20. 

Trust Company, The. Arthur H. Cooley. Bulletin, Feb. 15, 1903, p 9- 

Trust Company, The. Charles W. Stevenson. The Bankers' Monthly, 
July, August, September and October, 1903, Vol. XXV. 



BIBLIOGRAPHY. 483 

Trust Company of To-Day, The. Virgil M. Harris. The Banking Law 
Journal, February, 1905, Vol. XXII, pp 97-101. 

Trust Estate Management. John W, Marshall. Bulletin, January, 
1909, p 51. 

Trust Estates. H. B. Loud, Bulletin, October, 1906, p 1018. 

Working Force of a Trust Company, The. Albert S. Abbott. Bul- 
letin, Jan. 1, 1905. p 823. 

Working Force of a Trust Company, The. Geo. D. Sears. Bulletin, 
Dec. 15, 1904, p 766. 

BANKING, TECHNICAL AND GENERAL. 

(Most trust companies do either a savings or commercial banking- business, or 
both, and a thorough understanding of trust companies involves an understand- 
ing of the principles and practices of banking and of financial matters in general. 
In these fields the number of books is quite large, and only a few are included 
here.) 

A. B. C. of Banks and Banking, The. George M. Coffin. New York: 
S. A. Nelson, 1903. pp 136. 

Explains banking theory and practice in a simple way. 

A. B. C. of Stock Speculation, The. New York: S. A. Nelson, 1903. 
pp 232. 

Useful for an understanding of current methods of dealing in 
stocks. 
A. B. C. of Wall Street, The. Edited by S. A. Nelson. New York: 
S. A. Nelson, 1900. pp 164. 

Explains methods of trading, and gives general information as 
indicated by title. Includes a dictionary of Wall Street terms. . 
Accountancy of Investment, The. Charles Ezra Sprague. New 
York, 1904. pp 93. 

Includes a treatise on compound interest, annuities, amortization 
and the valuation of securities. Discusses theory of accounts, their 
form and application to diiferent kinds of investments. 
American Law Relating to Income and Principal, The. Edwin A. 
Howes, Jr. Boston, 1905. pp 104. 

Discusses the legal rules for the guidance of trustees in separating 
funds derived from investments into income and principal. 
Bank Systems. Boston: Library Bureau, 1901. pp 40. 

Practical accounting systems for trust companies and other banks. 

Care of Estates, The. Frederick Trevor Hill. New York, 1901. pp 
176. 

Practical questions regarding the rights, duties and liabilities of 
fiduciaries. 

Clearing Houses : Their History, Methods and Administration. 
James G. Cannon. New York: D. Appleton & Co., 1900. pp 383. 
A standard work on the subject. 



484 TRUST COMPANIES. 

Corporation Finance. Thomas L. Greene. New York. 

A study of the principles and methods of management of the 
finances of corporations in the United States, with special reference 
to the valuation of corporation securities. 
Foreign Exchange. New York: The Financier Co., 1902. pp 184. 

Reprint of a series of articles treating the subject in an element- 
ary way. 

Funds and Their Uses. F. A. Cleveland. New York: D. Appleton & 
Co., 1902. pp 297. 

Describes the methods, instruments and institutions employed in 
modern financial transactions. Illustrated. 
History of Banking in the United States, A. John J. Knox. New 
York: The Bankers' Publishing Co., 1903. pp 902. 

Gives the history of banking in the United States, with sketches 
of banking in each of the States. Makes some mention of trust 
companies. 

History of Savings Banks in the United States. Emerson W. Keyes. 
New York: Bradford Rhodes & Co., 1876. Vol. I, pp 438. 
Considers the subject in a general way and by States. 
International Exchange. Anthony W. Margraff. Chicago, J904. 
pp 300. 

A practical work on the foreign banking department and its 
administration by American bankers. 

Laws of the States, The, relating to trust companies. 

In many States the banking laws, including those relating to trust 
companies, are printed in separate pamphlets. They may be obtained 
from the State banking department, if any, or from the Secretary 
of State. 
Methods and Machinery of Practical Banking. Claudius B. Patten. 
New York: Bankers' Publishing Co., ninth edition, 1901. pp 520. 
Originally published in 1891 and revised to date. Treats in a 
verj^ interesting and instructive way of the practical details of the 
business, with illustrations. 
Modern Bank, The. Amos Kidder Fiske. New York: D. Appleton & 
Co., 1905. pp 348. 

Discusses principles and details of work, with forms and explana- 
tions. Has a brief chapter (No. 28) on State banks and trust 
companies. 
Modern Banking Methods. Albert R. Barrett. New York: The 
Bankers' Publishing Co., 1902. pp 320. 

Treats in detail of the various departments of National banks, 
methods of working, bookkeeping, etc., with numerous forms and 
illustrations. 
Modern Business Corporations. William Allen Wood. Indianapolis: 
The Bobbs-Merrill Co., 1906. 



BIBLIOGRAPHY. 485 

Defines corporations, explains their legal status, formation and 
organization, officers, capital stock and bonds, accounting, forms 
used. With a bibliography on corporations. 
Money and Banking. Horace White. Boston: Ginn & Co., 1902. pp 

467. 

Treats of the theory and principles of money and of banking, 
with historical sketches and descriptions of American banking insti- 
tutions, and of foreign banking systems. 
Money and Investments. Montgomery Rollins. Boston: Dana Estes 
& Co., 1907. pp 436. 

An encyclopedic dictionary of financial terms. 

National Bank Act, The. Washington: Government Printing Office. 
Contains the laws relating to National banks. Chapter IX gives 
the laws governing trust companies in the District of Columbia. 
Newest England. Henry D. Lloyd. New York, 1900. 

Under Chapter II, pp 12-30, is given a description of the Public 
Trustee of New Zealand. 
Practical Banking. Albert S. Bolles. New York, 1892. Eighth 
edition. 

Besides discussion of banking principles and methods, gives a 
brief sketch of loan and trust companies, pp 281-289- 
Practical Problems in Banking and Currency. Edited by Walter 
Henry Hull. New York: The MacMillan Co., 1907. pp 596. 

Under the Trust Company Section, pp 457-585, are included re- 
prints of a number of the papers read at the meetings of The Trust 
Company Section of The American Bankers' Association and 
elsewhere. 
Principles and Practice of Finance. Edward Carroll, Jr. 

A practical guide for bankers and others. Summary of State and 
National banking laws, legal rates of interest, glossary of commer- 
cial and financial terms. 

Principles of Banking, The. Charles A. Conant. New York: Harper 
and Bros., 1908. pp 488. 

This is the second part of the author's work on The Principles of 
Money and Banking. Discusses the theory and history of banking, 
currency, reserves, evolution of commercial banking, crises. 

Savings and Savings Institutions. James Henry Hamilton. New 
York: The MacMillan Co., 1902. pp 428. 

Explains the theory, benefits and educational aspects of savings. 
Discusses different kinds of savings institutions, including postal 
savings banks. With a bibliography. 

State Banking in the United States Since the Passage of the 
National Bank Act. George E. Barnett. Baltimore: The Johns 
Hopkins Press, 1902. pp 117. 



486 TRUST COMPANIES. 

One of the Johns Hopkins University Studies. Treats the sub- 
ject from the economic standpoint. 

Theory and History of Banking, The. Charles F. Dunbar. New 
York: G. P. Putnam's Sons, 1891. Revised edition, 1904. 

Explains the theory of banking operations, and sketches the prin- 
cipal foreign banks and the National banks of the United States. 

Trust Finance. Edward S. Meade. New York: D. Appleton & Co., 
1907. pp 387. 

A study of the genesis, organization and management of industrial 
corporations. Origin, methods, promotion, sale of stock, U. S. Steel 
Corporation, capitalization, suggestions for reform and legislation. 

Trustee's Handbook, A. Augustus Peabody Loring. Boston, 1900. 

pp 191. 

States the rules governing the management of trust estates and 
the relationship between trustees and beneficiaries. 

Wall Street and the Country. Charles A. Conant. New York: G. P. 
Putnam's Sons, 1904. pp 247. 

Chapter VI, pp 205-235, The Growth of Trust Companies. 
Work of Wall Street, The. Sereno S. Pratt. New York: D. Apple- 
ton & Co., 1903. pp 286. 

Explains the subject in theory and practical detail with clearness 
and interest. Specially valuable for an understanding of financial 
methods. 



GENERAL INDEX. 



(References are to pages. See also Index of Forms) 

PAGE 

Accounting, system of 100, 323 

Accounts, opening of 178, 268 

Administrator, definition of, 37; duties of, 371; power to 

act as 78 

Advantages of trust companies 32, 45 

Advertising, chapter XII 307 

Advertising campaign, 310; copy, preparation of, 320; for 
trust business, 318; manager, 97; mediums of, 312; 

department, 97; reasons for 307 

Agency houses in India 4, 377 

Agent for corporations, business as (also see chapter XV) 41 

Alabama, 28; trust company laws of 390 

American Institute of Banking, The 332 

Arizona, 28 ; trust company laws of 391 

Arkansas, 28 ; trust company laws of 391 

Assignee, duties of, 40; fees as 335 

Attorney of company 97 

Audits (see Chapter XIII.), 323; purpose of, 324; auditing 

department, 98, 327; duties of auditor 98 

Australian trustee companies , 377 

Babcock, Philip S., quoted 352 

Baltimore, 12; trust companies in 29 

Bangs, Francis S 3 

Bank of England 15 

Bankers Magazine, quoted 7, 9, 11, 12, 13, 14, 15, 32 

Bankers Monthly, quoted 32 

Bankers Trust Company, New York , 30 

Banking by mail 337 

Banking department, forms and records for, Chapter VIII., 

177 ; employees of, 92 

Banking powers of trust companies 80 

Banks and trust companies, comparative growth of, 19; com- 
parison of, 47; competition between 14 

Barnett, George E., quoted 16 

Bibliography 476 

Bills Discounted 245 

Board of directors or trustees 60, 67, 74, 316 

Bond department 96 

Bond issues, duties and liabilities as trustee under 361 

Bond trusts, forms for, 137; requisites in accepting 366 

Bookkeepers, duties of 92, 96 

487 



488 GENERAL INDEX. 

PAGE 

Boston, 9, 11, 12; trust companies in 29 

Boston ledger, 195; for general accounts 217 

Boston Safe Deposit and Trust Company 12 

Bowdoin, Henry J., quoted 352, 358 

Bradsteet's, quoted 22, 23 

Branch banking 337 

Brooklyn (N. Y.) Trust Company 11, 13, 30 

Buenos Ayres, trust companies in 387 

Buildings and offices . . . . 338, 339 

By-laws . 59 

California, 20, 28 ; trust company laws of 393 

California Safe Deposit and Trust Company 24 

Camden Safe Deposit and Trust Company 11 

Capital stock 75, 83 

Canadian trust companies 384 

Cape Colony Trustee and Executor companies in 377 

Card records 102, 128, 178, 279 

Cator, George, quoted 2, 6, 8, 10, 14, 16 

Central Trust Company, New York 30 

Central Trust Company of Illinois, Chicago 30 

Certificates of deposit 258 

Certified checks 260 

Charter, special 68, 73 

Checks, forms of, 181 ; voucher 183 

Chicago, 12, 17; trust companies in . 29 

Chicago Fidelity Safe Depository 12 

Chicago Loan & Trust Company 8 

Chicago Tribune 17 

Chief clerk, duties of 92, 94, 96 

Cincinnati, 12; Cincinnati ledger, 199; trust companies in. . 29 

Cities, number and resources of trust companies in the larger 29, 30 

Citizens Savings and Trust Company, Cleveland 30 

Civil War, 8; organization of trust companies after 10, 31 

Clearance clerks, duties of 93 

Clearing checks 252 

Cleveland Trust Company, Cleveland 30 

Collection teller, duties of 93 

Collections , . 253 

Colorado, 28 ; trust company laws of 396 

Columbia-Knickerbocker Trust Company, New York 30 

Commercial and Financial Chronicle, quoted 13, 15 

Comparative growth of banks and trust companies 19 

Comptroller of the Currency, quoted, 9, 13, 14, 17, 19, 20; 

reports of 17 

Connecticut n, 14, 17, 28 



GENERAL INDEX. 489 

PAGE 

Connecticut, Bank Commissioners of, 14; trust company 

laws of 397 

Connecticut Trust & Safe Deposit Company, Hartford. ... 11 

Conservator, duties of 374 

Continental & Commercial Trust & Savings Bank Chicago. . 30 

Corporations division of trust department, The 33, 113, 127 

Cou}3on clerk, 95; ledger and record, 116; record 143 

Coupons, handling of, 145 : payment of 369 

Credit department 98 

Cremation of securities 139 

Customers, forms for the use of, 178, 272; treatment of. . 317 

Cuba, trust companies in 386 

Daily statement 214 

Delaware, 28; trust company laws of 399 

Departments of trust companies 33 

Depositary under reorganization plans, duties as 370 

Deposit with state 83 

Deposits of banks and of trust companies, table showing, 

20; chart 21 

Deputy, safe deposit, appointment of 164 

Development of trust companies Chapter 1 

Directors, selection of, 67; number required, 74; as sources 

of business 316 

Discount clerk, duties of 92 

Discount powers 80 

District of Columbia, 28; trust company laws of 400 

Duties of trust companies acting in various capacities. 

Chapter XV 346 

Double liability of stockholders 83 

Earning power of trust companies, sources of 52 

Empire Trust Company, New York 30 

Employees, qualifications of, 330; duties of the various, 

Chapter V, 89; selection and treatment of 328, 332 

England and Scotland, trust companies in 388 

Equitable Trust Company, New York 30 

Escrows 370 

Estates division of the trust department 113, 118, 148 

European countries, trust companies in 31, 388, 389 

Examinations, legal requirements for, 87; discussion of, 

323 ; various kinds 325 

Examining committee 62 

Executive committee 61 

Executor, definition of, 37; duties of, 371; power to act as 78 

Expense records 262 

Express packages, record of 146 

Failures of various classes of financial institutions 22 

32 



490 



GENERAL INDEX. 



PAGE 

Farmers' Fire Insurance & Loan Company 2, 3, 4 

Farmers' Loan & Trust Company S, 6, 10, 30 

Fees, problem of determining, 333; as executor, adminis- 
trator, guardian, 334; as assignee and receiver, 335; as 
trustee under bond issues, 335; as transfer agent, 336; 

for care of estates, 335 ; ledger for 146 

Fidelity insurance 44, 80 

Fidelity Trust Company, Newark, N.J 30 

Fidelity Trust Company, Philadelphia 11, 30 

Financing and reorganization of corporations 43 

First Trust & Savings Bank Chicago 30 

Florida, 28 ; trust company laws of 401 

Foreign countries, trust companies in. Chapter XVI 377 

Foreign exchange department 96 

Formative period trust companies still in ■ 53 

Franklin Trust Company, New York 59 

Free Banking Law in New York 7 

Freedman's Savings & Trust Company 12 

Functions of trust companies, 1 ; Chapter II 33 

Gage, Lyman J 8 

General books, 211 ; general bookkeeper 92 

General statutes relating to trust companies, 16, Chapter 

IV., Chapter XVII 

Georgia, 10, 28; trust company laws of 403 

Girard Life Insurance, Annuity & Trust Company 5 

Girard Trust Company 6, 30 

Greene, Charles A., quoted 352 

Greene, Thomas L., quoted 368 

Growth of trust companies, 16; charts showing, 18, 21; 

causes of 31 

Guarantee & Investment Association, Chicago 12 

Guaranty Trust Company, New York 29, 30 

Guardian, duties of, 374; power to act as 78 

Guardian Savings & Trust Company, Cleveland 30 

Harris Trust & Savings Bank, Chicago 30 

Hartford 12 

Hartford Trust Company 11 

Hawaii, 28; trust companies in, 386; trust company 

laws of 404 

History of the trust company movement in the United 

States, Chapter I. . . 1 

Idaho, 28 ; trust company laws of 405 

Illinois, 10, 16, 28; early trust companies in, 8; trust com- 
pany laws of 406 

Illinois Trust & Savings Bank, Chicago 11, 30 



GENERAL INDEX. 491 

PAGE 

Incorporation of trust companies, 55; in various states (see 

Chapter XVII.) 390 

Increasing business, methods of, Chapter XII 307 

Indiana, 28; trust company laws of 408 

Individual books 193 

Individual deposits, growth of, 19; chart showing 21 

Individual trusts, nature and variety of 34 

Industrial Bank of Japan 387 

Industrial Trust Company, Providence 30 

Insolvency business 40 

Interest on checking accounts 204 

Investment of trust funds 38, 375 

Investment business, 38 ; records 148, 249 

Iowa, 10, 28 ; trust company laws of 409 

Jackson, President 9 

Japan, trust companies in 387 

Joint tenants of safe deposit box 165 

Jones, Breckenridge 12, 48 

Journals, individual, 198; general, 212; savings, 276; 

trust 110, 119, 126 

Judah, Noble B 360 

Kansas, 20, 28; trust company laws of 411 

Kentucky, 20, 28; trust company laws of 412 

Kentucky Trust Company 7 

King, Willard V., quoted 360 

Knickerbocker Trust Company, New York. . . 24 

Knox, John J., Comptroller, quoted 13 

Labor-saving devices 177, 336 

Larger trust companies, table of the 30 

Laws of the various states relating to trust companies, 

Chapter XVII 390 

Lawyers and trust companies 52, 320 

Ledgers for general accounts, 212; for individual accounts, 

195; for savings accounts, 278; for trust accounts. . . .110, 114, 118 

Legal department 97 

Legislation, trust company, Chapter IV 74 

Letters of remittance etc 254 

Liabilities of trust companies acting in various capacities. . 346 

Life insurance companies 10 

Life insurance trusts 36 

Lincoln, President 8 

Loan clerk, duties of, 91 ; loan department 220 

Loans, restrictions regarding (also see Chapter XVII.) ... 84 

Loose-leaf books 101, 118 

Louisiana, 28 ; trust company laws of 414 

Mail, banking by 337 



492 



GENERAL INDEX. 



PAGE 

Maine, 28; trust company laws of 416 

Managers of various departments 96. 98 

Maryland, 10, 28; trust company laws of 418 

Massachusetts, 11, 17, 28; trust company laws of 420 

Massachusetts Trust Company, Boston 11 

Mercantile Trust Company, St. Louis 30 

Merchants' Loan & Trust Company, Chicago 8, 30 

Metropolitan Trust Company, New York 30 

Mexico, trust companies in 386 

Michigan, 28 ; trust company laws of 423 

Minnesota, 28 ; trust company laws of 425 

Miscellaneous functions of trust companies 51 

Mississippi, 28 ; trust company laws of 426 

Mississippi Valley Trust Company, St. Louis 30 

Missouri, 16, 28; trust company laws of 428 

Montana, 28 ; trust company laws of 430 

Morris, C. F., quoted 349 

Mortgage deed, form of 237 

Mortgage loans 231 

National banks, 16, 24; growth of deposits, 19, 20, 21; 

number in 1875, 17; suspensions of 22, 23 

National Park Bank, New York 12 

National Trust Company, New York 11, 13 

Nebraska, 28 ; trust company laws of 431 

Nevada, 28 ; trust company laws of 433 

New accounts teller 93 

New England States 10 

New England Trust Company, Boston 11 

New Hampshire, 28; trust company laws of 434 

New Jersey, 10, 28; trust company laws of 436 

New Mexico, 28; trust company laws of 439 

New York, 10, 11, 12, 13, 16, 17, 26, 28, 29; Bank Super- 
intendent of, 13, 14, 15, 24; early trust companies in, 
2, 9; incorporation of trust companies in, 55; powers 
of trust companies in, 76 ; trust company failures in, 

24; trust company laws of, 441; trust companies in. . . 29 

New York Guaranty & Indemnity Company . 11 

New York Life Insurance & Trust Company 4, 6, 10, 30 

New York Mercantile & Trust Company 11 

New York Trust Company 30 

New Zealand Public Trust Office 382 

North American Trust & Banking Company, New York. . . 7 

North Carolina, 28 ; trust company laws of 445 

North Dakota, 28; trust company laws of 446 

Northern Trust Company Chicago 30 

Northern Trust Company, Philadelphia 11 



GENERAL INDEX. 493 

PAGE 

Number of trust companies. 16, 17, 18, 19, 20, 21; in vari- 
ous states, 28 ; in various cities 29 

Officers and employees (Chapter V.) 89 

Officers, duties of the various 89 

Offices and buildings 317, 338 

Official checks 255 

Ohio, 20, 28 ; trust coirnany laws of 448 

Ohio Life Insurance & Trust Company, Cincinnati 7 

Oklahoma, 28 ; trust company laws of 450 

Old Colony Trust Company, Boston, 30; stock transfer 

rules of 355 

Opening accounts 178, 268 

Oregon, 28 ; trust company laws of 452 

Organization of trust companies, Chapter III 54 

Panic of 1907 24 

Pass-books, commercial, 179; savings 272 

Pennsj^lvania, 10, 11, 15, 16, 17, 28, 29: trust company 

laws of 454 

Pennsylvania Company for Insurance on Lives and Grant- 
ing Annuities 4, 5, 6, 30 

Perry Ross, quoted 350 

"Pet' banks" 9 

Philadelphia, 4, 9, 12, 14; trust companies in 29 

Porto Rico, trust companies in 386 

Powers of trust companies, 76; in New York (see also 

Chapter XVII.) 76 

Private banks, suspensions of , 22, 23 

Probate business, 37; Probate claim docket, 155; Probate 

settlement docket 109 

Proceedings Trust Company Section, American Bankers' 

Association (See Trust Company Section) 

Proofs, bookkeepers', 193; tellers' 188 

Provident Life & Trust Company, Philadelphia . . . 10 

Rackemann, Felix, quoted 353. 358 

Real estate business, 40 ; department, 97 ; trust company 
holdings of, 79; real estate mortgage loans, 231; real 

estate department, Chapter X 284 

Real Estate Loan & Trust Company, Chicago 8 

Receiver, duties of .' 40 

Records, remarks concerning 100 

Registering trusts 103 

Registered mail and express, record of 146 

Registrar of stock, 42; duties and liabilities as 358 

Regulation of trust companies, statutory (also see Chap- 

, ^ ters IV. and XVII.) 82, 87 

Rents, record of 153 



494 GENERAL INDEX. 

PAGE 

Reorganization and financing 43 

Reports 87 

Reserves of trust companies 26, 27 ', 85, 86 

Resources and liabilities of trust companies, 1875-1913. . . . 25, 26 

Rhode Island, 17, 28; trust company laws of 457 

Rhode Island Hospital Trust Company, Providence 10, 30 

Rollins, Jordan J 349 

Safe deposit business, 45, 80, 96; department, Chapter VII. 162 

Safe deposit companies, early 11 

Safe Deposit Company, New York 12 

Safe Deposit & Trust Company, Baltimore 11 

Safe Deposit & Trust Company, Pittsburg 10 

St. Louis Union Trust Company, St. Louis 30 

Savings banks, 51; growth of deposits, 19, 20, 21; number 

in 1830, etc., 9; in 1875, 17; suspensions of, 22, 23; 

progress relative to that of trust companies 9 

Savings department, Chapter IX 268 

Savings Union Bank & Trust Company, San Francisco. ... 30 

Scotland and England, trust companies in 388 

Secretary and Treasurer, duties of 90 

Securities, records of 148, 249 

Security Trust & Savings Bank, Los Angeles 30 

South Carolina, 28; trust company laws of 459 

South Dakota, 28; trust company laws of 459 

Southern Life Insurance and Trust Company 7 

State banks, 24; growth of deposits. 19-21 ; number in 1875, 

17 ; suspensions of 22, 23 

State regulation (see Chapters IV. and XV11.) 

Statement of accounts 208 

States, statistics of trust companies in 28, 29 

Statistical department 97 

Statistics of trust companies, 16-30; tables of 20-30 

Stevenson, Charles W., quoted 32 

Stewart, John A 8 

Stock, duties and liabilities of registrar of, 358; of agent 

for transfers of, 346; rules for issue and transfer of. . 355 

Stock ledgers, 137 ; registers 134 

Stockholders 55, 316 

Stone, Ralph, quoted 2 

Stop payments on checks 210 

Storage department 172 

Sumner, Charles 13 

Sundry topics, Chapter XIV 333 

Superiority of trust companies over individuals in trust 

capacities 45 

Supervision of trust companies 14, 82 



GENERAL INDEX 495 

PAGE 

Supply department records, 265 ; clerk 9S 

Surplus fund, accumulation of 83 

Surplus and undivided profits, growth of, 27, 28 ; chart 

showing . . . . 27 

Suspension of banks and trust companies 22-24 

Tellers, duties of, 93 ; records 188 

Tennessee, 28; trust company laws of 460 

Texas, 28 ; trust company laws of 462 

Ticklers 127-130, 138, 148, 153 

Time and labor-saving devices 177, 336 

Title Guarantee & Trust Company, New York 30 

Title insurance, 44, 80; department, Chapter XI., 297; 

policy, conditions of 301 

Transfer agent, 42; duties as, 346; liabilities as, 348; meth- 
ods of safeguarding, 354; transfer clerk 95, 131 

Transfer of stock, methods and forms used, 131; rules for. 355 

Trial balance 205 

Trust, definition of , 33 

Trust & Deposit Company of Onondaga, Syracuse 10 

"Trust Companies" magazine, quoted 24 

Trust companies in foreign countries, Chapter XVI 377 

"Trust Companies of the United States," quoted 10, 17, 19, 20, 28 

Trust Company Section of The American Bankers' Associa- 
tion 24, 47, 74, 83, 103, 333, 347, 349, 354, 361, 369 

Trust department, work of, 94; forms and records for, 

Chapter VI., 100; methods of increasing business of. 318 

Trust funds, 24; the investment of 375 

Trust officer, duties of 90, 95 

Trustee in bankruptcy 40 

Trustee under bond issues, duties and liabilities of 361 

Trustee, duties of, 41, 137, 373; various functions as, 34- 

37 ; power to act as 79 

Undivided profits and surplus 27 

Union Trust Company, New York 10, 13, 30 

Union Trust Company, Pittsburg 30 

Union Trust Company, Providence 24 

United States Mortgage & Trust Company, New York. ... 17, 30 

United States Trust Company, New York 8, 10, 30 

Utah, 28 ; trust company laws of 465 

Utility clerks, duties of 93 

Vermont, 28 ; trust company laws of 466 

Vierling, Frederick 356 

Virginia, 28 ; trust company laws of 468 

Voucher checks 183 

Vouchers, trust department 157 

Walker, Guy Morrison 53 



496 GENERAL INDEX 

Warehouse Security Company, New York 13 

Washington, 28; trust company laws of 469 

West Virginia, 28 ; trust company laws of 470 

Williams, Clark 24 

Wills, record of . ". 160 

Wisconsin, 28; trust company laws of 472 

Withdrawals on savings accounts 276 

Women as employees 331 

Worcester Safe Deposit & Trust Company, Worcester, Mass. 11 

Working force, organization of, Chapter V 89 

Wyoming, 28 ; trust company laws of 474 

Young Men's Christian Association 332 



INDEX TO FORMS. 

See also General Index 



FIGURES PAGES 

Advertising list, card for 284,285 310, 311 

Affidavit to loss of pass-book 251 282 

Application for draft 215 259 

Appointment of deputy (safe deposit) .... 90 165 

Authority to hypothecate securities ... 229 

Balance ledger 130 200 

Bond memorandum card 4-3 140 

Bond, mortgage 183 236 

Bond register 39-42 138-140 

Bonds, record of 57, 6l 149, 150 

Bonds, registered, record of 46, 47 142 

Bonds, requisition for 44 141 

Boston ledger 128 196, 197 

Boston ledger for general accounts 155-157 217, 218 

Cash book, safe deposit 93 168 

Certificate of authority for joint control. . . 234 272 

Certificate of authority to draw funds 233 272 

Certificate of deposit 216 259 

Certificate of deposit record 219 261 

Certificate of deposit register 217, 218 260 

Certificate of deposit of pkge., safe deposit. 100 172 

Certified check 220 261 

Certified check, debit slip for 222 263 

Certified check ledger account 223, 224 263 

Certified check register 221 263 

Check 113 182 

Check, counter 115, 116 184 

Check, official 212 257 

Check on savings account 239 275 

Check scratcher or journal 132 201 

Check, trust department 82 159 

Check-stub 113, 114 182-183 

Check, voucher 117-123 185-187 

Check and deposit journal 131, 134 201, 202 

Claim docket, Probate 79 157 

Clearing House list 203 250, 251 

Collateral line ledger 169-171 226, 227 

Collateral loan envelope 174 230 

Collateral note 172 228 

Collateral register 175, 176 231 

Collection register 204, 205 253 

497 



498 



INDEX TO FORMS. 



FIGURES 

Collection report 209 

Collection return slip 210 

Collection tickler 206 

Collection tracer 211 

Coupon enclosure form 50, 51 

Coupon, interest 181, 182 

Coupon record 12, 48, 49 

Credit slip 83, 159, 160 

Cremation certificate ... 

Daily report, banking department 162 

Daily report, safe deposit department. ... 105 

Daily statement 152-154 

Debit slip 158, 160 

Debit slip for certified check 222 

Demand loan ledger 164, 165 

Deposit slip 108, 109 

Deposit slip, duplicate 112 

Deposit slip, savings 236 

Deposit scratcher or journal 133 

Deputy, appointment of, safe deposit 90 

Deputy-ship, safe deposit, form for revok- 
ing 91 

Discount register 194 

Discount tickler 195 

Draft, application for 215 

Draft, New York 213 

Draft register 214 

Employment application envelope 286 

Endorsement stamp, loan payment 187 

Expense voucher, petty 161 

Expense voucher record 225, 226 

Express and registered mail record 53, 54 

Fee ledger 52 

General bookkeeper's proof 146 

General cash summary 126 

General journal 147-149 

General ledger 150, 151 

Identification card, safe deposit 89 

Income on investments, record of 202 

Index of inquirers (Real Estate Dept.) . . . 259 

Index of owners (Real Estate Dept.) 258 

Index of properties (Real Estate Dept.) . . 254, 255 

Index of securities held in trust 64 

Index of tenants 256, 257 

Individual bookkeeper's proof 127 

Individual journal 129, 131-134 



PAGES 




256 




257 




254 




257 


144, 


145 




235 


117; 


143 


159,219; 


220 




139 




221 




175 


214-216 


219; 


,220 




263 




223 


179 


, 180 




182 




274 




201 




165 




166 




245 




246 




259 




258 




258 




329 




241 




220 




264 




146 




146 




211 




193 


212 


,213 


213 


,214 




164 




249 




288 




288 




286 




151 




287 




194 


199,201 


,202 



INDEX TO FORMS. 499 

FIGURES PAGES 

Individual ledger 135, 137, 138 202, 204, 205 

Insurance record 74, 271 147, 294 

Insurance tickler 73 155 

Interest coupon, mortgage note 181, 182 235 

Interest notice 189, 190 242, 243 

Interest on loans, record of 63 150 

Interest, sheet for figuring 191 243 

Interest statement . . 136 203 

Investment ledger 201 249 

Investments, record of income on 202 249 

Journal, general 147-149 212, 213 

Journal, individual 129, 131-134 199, 201-202 

Journal, loan 163 222 

Journal, Real Estate Dept 274 296 

Journal, savings 242-244 277, 278 

111, 113 
119-121 

Journal and ledger, trust 22 125, 126 

Ledger, balance 130 200 

Ledger, Boston 128 196^ 197 

Ledger, Boston, for general accounts 155-157 217 218 

Ledger, coupon 12 117 

Ledger, fee 52 145 

Ledger, general 150,151 213,214 

Ledger, individual 135, 137, 138 202 204 205 

Ledger, line 65,169-171 151,226.227 

196-198 246 

Ledger, loan 164-168 

184, 185 

Ledger, safe deposit 94, 95 169 

Ledger, savings 245-249 279-281 



Journal, trust 7, 8, 13-15 



223-225,239 



Ledger, trust 9-1 1, 16-22 



115, 116 
122-126 



Ledger and journal, trust 22 125, 126 

Line ledger, collateral 169-171 226, 227 

Line ledger, discount 196-198 246 

Line ledger of securities held in trust 65 151 

Loan application, mortgage 177, 178 232, 233 

Loan book 192 244 

Loan ledger 164-8, 184-5 223-225, 239 

Loan payment endorsement stamp 187 241 

Loan and income journal 163 222 

Lost pass-book, affidavit to 251 282 

Memorandum of new tenant 263 291 

Memorandum of sale 260 289 

Mortgage bond 183 236 



500 



INDEX TO FORMS. 



FIGURES PAGES 

Mortgage deed ... 237, 238 

Mortgage ledger 184, 185 239 

Mortgage loan application 177, 178 232, 233 

Mortgage loan envelope 186 241 

Mortgage loans, record of 59, 62, 66, 67 149-152 

Mortgage note 179, 180 234 

Mortgage note interest coupon 181, 182 235 

New York draft 213 258 

Note, collateral 172 228 

Note, common form 199 247 

Note, mortgage 179, 180 234 

Notice of savings withdrawal 240 275 

Official check . /. 212 257 

Owners of property, index of 258 288 

Package record 103 174 

Package, certificate of deposit of 100 172 

Pass-book 110,111 180,181 

Pass-book, savings 235 273 

Pass-book, affidavit to loss of 251 282 

Paving teller's proof 125 191, 192 

Pay-roll slip 227 266 

Permission to inspect property 262 291 

Power of attorney for transfer of stock. ... 173 229 

Probate claim docket 79 157 

Probate settlement docket 6 110 

Proof, general bookkeeper's 146 211 

Proof, general cash 126 193 

Proof, individual bookkeeper's 127 194 

Proof, paying-teller's 125 191, 192 

Proof, receiving teller's 124 189, 190 

Property, index of r . 254<, 255 286 

Property, list of 269 293 

Property listed, description of 253 285 

Real Estate Department journal 274 296 

Real estate loans, record of 59 , 62, 66, 61 149-152 

Real estate loan application 177, 178 232, 233 

Real estate record 68, 69 147, 153 

Receipt for bonds 45 142 

Receipt for certificate of storage 102 173 

Receipt for coupons 50 144 

Receipt for package left for storage 100 172 

Receipt for rent 265 292 

Receipt for safe rent 88, 101 163, 173 

Receipt for savings book 250 282 

Receipt for stock certificate 30, 31 132 

Receipt for stock left for transfer 27, 28, 29 130, 131 



INDEX TO FORMS. 501 

FIGURES PAGES 

Receipt and identification card, safe deposit. 89 164 

Receiving teller's proof 124 189, 190 

Register of trusts 1-5 103-109 

Registered mail and express record 53, 54 146 

Release from mortgage ... 240 

Remittance letter 207-209 254-256 

Removal memorandum 264 291 

Rent book 70, 71, 275 154, 296 

Rent notice 266, 267 292, 293 

Rent, receipt for 2165 292 

Rent record 72 155 

Rent roll-book '. 270 293 

Rental, renewal and surrender book 104 174 

Rents collected, statement of 273 296 

Report, daily . 105, 162 175, 221 

Report of sale 26l 290 

Report to Executive Committee 193 244 

Requisition for bonds 44 141 

Requisition for supplies or repairs 268 293 

Return slip 210 257 

Safe deposit department cash-book " 93 168 

Safe deposit ledger 94, 95 169 

Safe deposit register 92 167 

Safe deposit tickler 96 170 

Safe Deposit Visitors' Register 99 172 

Safe register 97, 98 170, 171 

Safe rent, receipt for 88, 101 163, 173 

Sale agency contract 252 284 

Sale, memorandum of 260 289 

Sale, report of 26l 290 

Savings account, check on 239 275 

Savings book, receipt for 250 282 

Savings deposit journal 243, 244 277, 278 

Savings deposit slip 236 274 

Savings ledger 245-249 279-281 

Savings ledger trial balance 249 281 

Savings pass-book 235 273 

Savings withdrawal journal 242 277 

Savings withdrawal slip 237, 238 274, 275 

Securities, record of 56-62, 66, 67 147, 149-152 

Settlement docket, probate 6 110 

Signature card 106-7, 230-2 178, 269, 270 

Statement, daily 152-154 214-216 

Statement of account 140-143 206-209 

Statement of borrower, form for 200 • 247, 248 

Statement of rents collected 273 296 



502 INDEX TO FORMS. 

FIGURES PAGES 

Statement to beneficiaries 84-86 160 

Stock ledger 35-38 135-137 

Stock, record of 58, 6l 149, 150 

Stock transfer book or register . 32-34 133, 134 

Stop-payment memorandum 144, 145 210 

Substitution of collateral, form for 166 224 

Supplies, record of 228 266 

Tax book 75-78 1 56 

Tax record 272 295 

Tenant, memorandum of new 263 291 

Tenants, index of 256, 257 287 

Tickler, collection 206 254 

Tickler, discount 195 246 

Tickler, insurance 73 155 

Tickler, safe deposit 96 170 

Tickler, time loan 188 241 

Tickler, trust department 23-26, 55 127-129, 148 

Time loan ledger 167, 168 224, 225 

Title, application for guarantee of 276 298 

Title insurance policy 277-282 299-305 

Title insurance policy register 283 306 

Tracer, collection 211 257 

Transfer of stock, power of attorney for. . 173 229 

Trial balance book 139 205 

Trust register 1-5 103-109 

Visitors' register, safe deposit 99 172 

Voucher check 117-123 185-187 

Voucher, petty expense l6l 220 

Voucher, trust department 80, 81 157, 158 

Voucher record, expense 225, 226 264 

Wills on file, record of 87 161 

Withdrawal, acknowledgment of notice of. . 241 276 

Withdrawal journal, savings 242 277 

Withdrawal, notice of 240 275 

Withdrawal slip, savings 237, 238 274, 275 



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